Managerial economics problem

Managerial economics problem

Managerial Economics

Question: You are in the market for a new refrigerator for your company’s
lounge, and you have narrowed the search down to two models. The energy
efficient model sells for $500 and will save you $25 at the end of each of the
next five years in electricity costs. The standard model has features similar
to the energy efficient model but provides no future saving in electricity
costs. It is priced at only $400. Assuming your opportunity cost of funds is 5
percent, which refrigerator should you purchase.
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