Life Cycle Costing Analysis Assignment

A Catholic school is considering refurbishing the lighting system in its administration building. After initial investigation, the school procurement office has narrowed down the options to two.

Option 1 is an Ergolight system that costs $500,000 to purchase and install.

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

Both systems are expected to last for twenty years.

The energy and maintenance costs for Option 1 are $20,000 and $2,000, respectively.

The energy and maintenance costs for Option 2 are $50,000 and $10,000.

Assume that all costs are to be paid at the end of the year, and the real discount rate is 4 percent.

I am supposed to use Excel Spreadsheet in which you address the following:

The LCC method of calculations should be shown on your spreadsheet, followed by responses to the posed questions.

Which lighting system should the school select based on financial considerations? Use the LCC method to address this question.

What is capital budgeting? How does it relate to the mission and strategic planning of a nonprofit?

What are the major sources of financing for capital projects?