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1) City of Decatur administration is considering refurbishing lighting system of its administration building. After the initial investigation, city procurement office narrowed down choices to following two options:

i) Option 1- is an Urgolight system that costs $500,000 to purchase and install

ii) Option 2- is a conventional system that costs $100,000 to purchase and install

a) Both systems are expected to last for 20 years

b) The energy cost for option 1 is $20,000 and maintenance is $2,000

c) The energy cost for Option 2 is $50,000 and maintenance is $10,000

d) Suppose a discount rate of 4%, and all future cost are paid at year end Which lighting system must the city choose based on financial life cycle costing?

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Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M914893

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