A change in air pollution control equipment is being explored. A baghouse filter is being considered to replace an existing electrostatic precipitator. Consider the costs and savings for the project in the following data:
Cost of new baghouse filter = $250,000
Projected utility savings = $70,000/y
Time over which cost comparison should be made = 7 years
Internal hurdle rate = 7% pa.
Should the baghouse filter be purchased and installed?