Question: Eddie's Precision Machine Shop is insured for $900,000. The present yearly insurance premium is $0.95 per $100 of coverage. A sprinkler system with an estimated life of 20 years and no salvage value can be installed for $30,000. Annual maintenance costs for the sprinkler system are $400. If the sprinkler system is installed, the system must be included in the shop's value for insurance purposes, but the insurance premium will reduce to $0.40 per $100 of coverage. Eddie uses a MARR of 15%/year.
What is the future worth of this investment?