During the design of a new industrial building, two lighting systems are being considered with the...

 

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During the design of a new industrial building, two lighting systems are being considered with the costs as listed below. Cost New Annual Operating Cost Salvage Value Expected Life Mercury Vapor Fluorescent Lighting Lighting $24,000 $14,000/year $3,000 30 years $45,000 $12,500/year $6,000 30 years Use incremental rate of return (IROR) method for comparing alternatives and a MARR of 6% per year. a) What is the Incremental Rate of Return? b) Which lighting systems should you choose? During the design of a new industrial building, two lighting systems are being considered with the costs as listed below. Cost New Annual Operating Cost Salvage Value Expected Life Mercury Vapor Fluorescent Lighting Lighting $24,000 $14,000/year $3,000 30 years $45,000 $12,500/year $6,000 30 years Use incremental rate of return (IROR) method for comparing alternatives and a MARR of 6% per year. a) What is the Incremental Rate of Return? b) Which lighting systems should you choose?

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To answer the question we first need to calculate the incremental cost and incremental cash flows of ... View the full answer