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Company B is to replace all incandescent lamps with fluorescent lighting fixtures. The total energy savings are estimated to be $2,500 per year, and the
Company B is to replace all incandescent lamps with fluorescent lighting fixtures. The total energy savings are estimated to be $2,500 per year, and the cost of purchasing and installing the fluorescent fixtures is $5,000. The study period is 5 years, and terminal market values for the fixtures are negligible. What is the external rate of return of this investment? Use an external reinvestment rate of 10%.
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