TO DO:You have been engaged as a cost consultant to help GoGreen Supercenter analyze the three different types of lighting systems for its parking lots. For the initial analysis, assume GoGreen Supercenter's cost of capital is 6%. Also, for the purpose of the cost comparison use a 10-year life for the parking lot light design system. For the purpose of brevity, ignore income taxes. Prepare NPV method, IRR method, and payback methodGoGreen Inc. has supercenters worldwide. Lee Smith, chief executive officer (CEO), was troubled because of the recent negative coverage of the company by media and activists. Specific criticisms included GoGreen's connections to human rights abuses associated with working conditions at their stores. During this period of criticism, a hurricane struck the Gulf Coast. One store manager of a GoGreen branch in the Gulf Coast went out of her way to help the community in need and provided people with essential supplies from the GoGreen store. The media and activists took notice of this incident and praised the company for its efforts. This brought in some positive media coverage for GoGreen.After this incident, Lee decided to change the company's focus to improve the brand image of GoGreen in the eyes of public. The company decided to focus on three Ps? profit, people, and planet. Lee believes that including people and planet along with profit will also justify the company name. Specifically, GoGreen decided to include sustainability as a part of the company's strategy and established four new goals?minimizing waste, using renewable energy, enhancing customer safety, and selling sustainable environmentally friendly products. With these goals, the CEO launched one of the company's biggest sustainability initiatives. One of the several initiatives focused on energy savings. The company plans to overhaul its refrigeration and lighting systems and use more renewable energy to lower the energy usage at various store locations.In this regard, GoGreen is interested in any cost savings that might be generated by using a light- emitting diode (LED)-type lighting system in its parking lots. LED systems have greater installation costs but use less energy and require less maintenance over their life. Thus, an important question is, can the LED systems pay for themselves over their life due to lifecycle cost savings? In addition to being concerned about cost-related issues, GoGreen also wants to be recognized as an environmentallyfriendly company and be able to promote this project as one sustainability-related initiative to enhance its image. GoGreen is also concerned about customer safety and wants to have enough light in its parking lots for customers to feel safe at night. Additionally, GoGreen wants to be recognized as a good neighbor and doesn't want its parking lot lights to be a distraction to its residential neighbors.GoGreen's management has identified three parking lot lighting systems as viable options. The following briefly describes the three parking lot lighting (design) systems for a supercenter branch in Oregon that was chosen to analyze the effect of this initiative.System I?Typical DesignThe Typical Design is the system currently used by GoGreen. This luminaire design uses 1000W rated lamps, which provides sufficient illumination, but consume excess energy.1 Retailers typically use higher levels of illumination than specifications to attract customers or to provide customers enhanced personal security. Since the power density of the Typical Design exceeds the design requirement specifications, another system, which is referred to as the Alternate Design that consumes less energy was selected for comparison purposes.System II?Alternate DesignThe Alternate Design uses less energy than the Typical Design and uses 400W rated lamps. The Alternate Design meets the parking lot requirement specifications but does not provide the high level of illumination as provided by the Typical Design. The Alternate Design uses less energy than the Typical Design but more energy than the LED Design (System III).System III?LED DesignThe LED Design is the most energy-efficient system but has the highest installation cost of all the systems. The high installation cost of the LED Design system is partly because of the lower level of illumination that results in more light poles required for the same size parking lot. Also, LED luminaires are costlier than the luminaires for the other two designs.COST INFORMATIONManagement conducted research on the costs associated with the three types of lighting systems. These costs are discussed next.Luminaire CostsLuminaires are the light fixtures attached to the top of the poles. The light fixtures include the costs of the bulbs. Below are the luminaire costs for each type of parking lot design system. These are "one time" costs and will not be incurred annually. Design System Luminaire CostsTypical $41,000Alternate $51,000LED $94,0001 Luminaires are the light fixtures attached to the top of the poles.

Other Installation Costs The only installation costs, other than the luminaire costs, are material and labor costs for the poles. Since the illumination of the Alternate Design and LED Design systems is not as bright as the Typical Design. they require more poles resulting in greater pole costs. Details of material and labor costs for installation of poles for each type of parking lot design system are as follows. Material 8: Labor Design System # at Poles Cost per Pole Typical Alternate 33 $1.60!] LED 33 $1.60!] Energy Usage and Electricity Costs Energy usage for each type of light design system has been accumulated by company management. The estimated electricity cost to be used in the analysis is $0.09/kWh. This is a conservative estimate as the average energy cost in the United States is more than $0.10/kWh. ' Design System Annual kWh Typical 233,000 Maintenance Costs The LED bulbs last longer than the conventional bulbs and, therefore, result in lower maintenance costs for the LED Design. Below are the annual maintenance costs of each design system. \"will" System Annual Maintenance Costs Typical Alternate $5475 LED ' $1.340