Quinton's refrigerator has just died. He can get a basic refrigerator or a more efficient refrigerator with an energy star designation. Quinton earns 4% compounded annually on his investments, he wants to consider a 10-year planning horizon, and he will use present worth analysis to determine the best alternative. What is your recommendation?
Basic unit: Initial cost 700, delivery and installation 60, professional servicing(year 5) 100, annual energy costs 120, salvage value(year 10) 150.
Energy star unit: Initial cost 800, delivery and installation 60, professional servicing(year 5) 100, annual energy costs 55, salvage value(year 10) 175.