Question
A certain factory building has an old lighting system, and lighting this building costs, on average, $20,000 a year. A lighting consultant tells the factory
A certain factory building has an old lighting system, and lighting this building costs, on average, $20,000 a year. A lighting consultant tells the factory supervisor that the lighting bill can be reduced to $8,000 a year if $50,000 were invested in relighting the factory building. If the new lighting system is installed, maintenance cost of $3,000 per year must be considered. If the new lighting system is estimated to have a life of 20 years, what is the net annual benefit for this investment in new lighting? Consider the MARR to be 12%. Both the new and old lighting system have zero salvage value. Please show all work!
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