You are working with the manager of an irrigation facility who is interested in installing a more efficient pumping system.

You are working with the manager of an irrigation facility who is interested in installing a
more efficient pumping system. The proposed system costs $15,000 and you project that it will
reduce the annual utility costs by $2,000. After five years, you expect to upgrade the system for
$4,000. This upgrade is expected to further reduce utility costs by $1,000 annually. The annual
effective interest rate is 7% and the life of the system, after upgrade is 50 years. What is the
Present Value of the investment in the system?
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