A certain factory building has an old lighting system. To light this building costs, on average, $30,000 a year. A lighting consultant tells the factory supervisor that the lighting bill could be reduced to $8,000 a year if $55,000 were invested in a new lighting system for the factory building. If the new lighting system is installed, an incremental maintenance cost of $4,000 per year must be considered. If the old lighting system has zero salvage value and the new lighting system is estimated to have a life of 20 years, what is the net annual benefit for this investment in new lighting? Consider the MARR to be 12%. Also consider that the new lighting system has zero salvage value at the end of its life.
A certain factory building has an old lighting system. To light this building costs, on average, $30,000 a year. A lighting consultant tells the factory supervisor that the lighting bill could be reduced to $8,000 a year if $55,000 were invested in a new lighting system for the factory building. If the new lighting system is installed, an incremental maintenance cost of $4,000 per year must be considered. If the old lighting system has zero salvage value and the new lighting system is estimated to have a life of 20 years, what is the net annual benefit for this investment in new lighting? Consider the MARR to be 12%. Also consider that the new lighting system has zero salvage value at the end of its life.
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