Q/ A certain factory building has an old lighting system, and lighting this building costs, on average, $20,000 a year.

Q/ A certain factory building has an old lighting system, and lighting this building costs, on average, $20,000 a year. A lighting consultant tells the factory supervisor that the lighting bill can be reduced to $8000 a year if $50,000 were invested in relighting the factory building. If the new lighting system is installed, an incremental maintenance cost of $3000 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.

SOLUTION: Q/ A certain factory building has an old lighting system, and lighting this building costs, on average, $20,000 a year. A lighting consultant tells the factory supervisor that the…