A retail outlet is being designed in a strip mall in Nebraska. For this outlet, the installed fiber glass insulation to protect against heat loss in the winter and heat gain in the summer will cost an estimated $90,000. The annual savings in energy due to the insulation will be $16,000 at EOY one in the 7-year life of the outlet, and these savings will increase by 15% each year thereafter. If the annual interest rate is 18%, is the cost of the proposed amount of insulation justified?
What is the present equivalent of energy savings?