bpa 331 life cycle costing analysis assignment

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The LCC method of calculations should be shown on your spreadsheet, followed by responses to the posed questions

A Catholic school is considering refurbishing the lighting system in its administration building. After initial investigation, the school procurement office has narrowed down the options to two.

  • Option 1 is an Ergolight® system that costs $500,000 to purchase and install.
  • Option 2 is a conventional system that costs $100,000 to purchase and install.

Both systems are expected to last for twenty years.

  • The energy and maintenance costs for Option 1 are $20,000 and $2,000, respectively.
  • The energy and maintenance costs for Option 2 are $50,000 and $10,000.

Assume that all costs are to be paid at the end of the year, and the real discount rate is 4 percent.

Create an Excel Spreadsheet in which you address the following:

  • Which lighting system should the school select based on financial considerations? Use the LCC method to address this question.
  • What is capital budgeting? How does it relate to the mission and strategic planning of a nonprofit?
  • What are the major sources of financing for capital projects?