Question 1
A building needs a replacement lighting system. The standard installation costs $24,000; a higher-efficiency alternative costs $36,000. The alternative saves $3,000 annually in electricity but adds $600 annually in maintenance. The owner accepts an upgrade only when its simple payback is no more than six years. With costs and savings otherwise unchanged, does this upgrade qualify?
Show answer & explanation
Correct answer: A - Yes; its incremental cost is recovered in 5 years.