Payback period and IRR of a Cost Reduction Proposal Differential Analysis A light-emitting diode LED) is a semiconductor diode that its narrow spectrum light. Although relatively expensive when compared to incandescent bus, they use significantly less energy and last six to ten times longer, with a slow decline in performance rather than an abrupt failure Metropolitan City currently has 80.000 incandescent bulibs in traffic lights at approximately 12,000 intersections. It is estimated that replacing all the incandescent bulbs with LED will cost 554.05 million However, the investment is also estimated to save the City $11.1 million per year in energy costs. a. Determine the payback period of converting Metropolitan City traffic lights to LEDS Round answer to one decimal place years b. If the average life of an incandescent streetlight is one year and the average life of an LED streetlight is seven years should the City finance the investment in LEDs at an interest rate of five percent per year? Justify your answer 1. Compute the internal rate of return on the project. Round to the nearest whole percent 2. Select the most appropriate answer based on computation No, the City should not make the investment because the IRR of the investment in LEDs is 50% of the interest rate Yes, the City should make the investment because the IRR of the investment in LEDS is 50of the interest rate No, the City should not make the investment because the IRR of the investment in LEDs is 200% of the interest rate. Wes, the City should make the investment because the IRR of the investment in LEDs 200% of the interest rate Next Previous e Save Answers 1206 N 12/2/202 Prison Home End Pguo poo A & % 5 ( 9 7 8 0 2 3 Business Course W Return to course 3 My Subscriptions Angelica Gonzalez 3 wewe Mand out of Payback period and IRR of a Cost Reduction Proposal-Differential Analysis A light emitting diode (LED) is a semiconductor diode that emts Carrow spectrum ight. Although relatively expensive when compared to incandescent bulbs, they use significantly less energy and last six to ten timeslonger with a slow decline in performance rather than an abrupt failure. Metropolitan City currently has 30,000 liricandescent bulbs in traffic lights at approximately 12,000 intersections. It is estimated that replacing all the incandescent bulbs with LED will Cost 554.03 million. However, the investment is also estimated to save the City 511.1 million per year in energy costs. Support becermine the payback period of converting Metropolitan City traffic lights to LED Round answer to one decimal place years be the average life of an incandescent streetlight is one year and the average life of an LED streetlight is seen years, should the city finance the investment in LEDs at an interest tate of five percent per year istify your answer L. Compute the internal rate of return on the project. Round to the nearest whole percent D at the most appropanate answer based on computation y should not make the investment because the IRR of the investment in LEDs is 50% of the interest rate the City should make the investment because the IRR of the investment in LEDS 5 of the interest rate, Not make the investment because the IRR of the westment in LEDs 2004 of the interest rate Could make the investment because the IRR of the investment in LEDE I 200% of the interest rate parts of the question PO Ad of 129 12/2/2000 PESCI Home End Pau Por
