The Alfred K. Ajax Business School is considering purchasing a $5,575 energy-efficient Philco Air Filtering system that will save the school $1,400 per year in operating costs for the next 5 years. The school plans to finance the system by taking out a 5 year loan. What is the maximum annual interest rate (HINT: cost of capital) that the business school can pay yet still break even on the $5,575 cost of the system.
A 7.70%
B 8.10%
C 5.58%
D 6.75%

Q&A Education