Problem:
You go to Big George's to buy a new refrigerator for your apartment. The store offers two models, regular (costs $1501) and energy efficient (costs $1702). Both will last for 10 years. The energy efficient refrigerator will save you $40 per year in electricity bills. The rate of interest is 12%.
Required:
Question: What's the present value of the energy saving from the energy efficient model?
Note: Please show how to work it out.