A Steel Company Wishes to Replace the Lighting in Its

question 130

Multiple Choice

A steel company wishes to replace the lighting in its warehouse with an energy efficient LED system.Installing the new lighting system will cost $1.5 million,but is expected to generate a cost savings of $140,000 per year for the next 25 years,when the new lights will need to be replaced.If the steel company has a cost of capital of 6%,what is the NPV of this investment?

• A)$289,670
• B)$2 million
• C)-$1.5 million
• D)$140,000
• E)$1,789,670

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