Budget problems
tyger06
BudgetTools2eModule18LCCSelfChecking2014.xlsxQuestions
| Type your name here, Last Name First |
| 18.2. The city administration is considering refurbishing the lighting system of its administration building. After an initial investigation, the city procurement office has narrowed down the choices to the following two options: |
| ¨ Option 1 is an Ergolight system that costs $500,000 to purchase and install. The energy cost for option 1 is $20,000, and its maintenance cost is $2,000. |
| ¨ Option 2 is a conventional system that costs $100,000 to purchase and install. The energy cost for option 2 is $50,000, and its maintenance cost is $10,000. |
| Both systems are expected to last for 20 years. Assume that the discount rate is 4% and all future costs are paid at the end of the year. |
| Which lighting system should the city select based on LCC considerations? |
| x |
| Type your name here, Last Name First |
| Please enter your name on the first page |
Exercise 18.2
| To show the cell checking, put a check here: | x | Percent Correct | 0% | |||
| Please enter your name on the first page | Grade in Points (All Sheets) | 0.00 | ||||
| City administration is considering refurbishing the lighting system of its administration building. | ||||||
| After initial investigation, the city procurement office has narrowed down the choices into the following two options: | ||||||
| Option 1 is a Ergolight system, which costs $500,000 to purchase and install. | ||||||
| Option 2 is a convention system, which costs $100,000 to purchase and install. | ||||||
| The system is expected to last for 20 years | ||||||
| The energy and maintenance cost for Option 1 is $20,000 and $2,000. | ||||||
| The energy and maintenance cost for Option 2 is $50,000 and $10,000. | ||||||
| Assume all gas costs paid at end of year. | ||||||
| Discount rate: 4% | ||||||
| Which lighting system should the city selected based on financial consideration. | ||||||
| Note: please use LCC analysis to facilitate the decision-making. | ||||||
| Parameters/Assumptions | ||||||
| Ergolight | Conventional | |||||
| Discount rate | 4% | 4% | ||||
| Economic life (year) | 20 | 20 | ||||
| Purchasing price | $500,000 | $100,000 | ||||
| Electricity costs/year | $20,000 | $50,000 | ||||
| Maintenance/year | $2,000 | $10,000 | ||||
| LCC Calculation | ||||||
| Costs | Ergolight | Conventional | ||||
| Purchase | $500,000 | $100,000 | ||||
| Electricity | ||||||
| Maintenance | ||||||
| LCC | ||||||
| Select One (with an "x"): | ||||||
| Therefore, we recommend the Ergolight system. | ||||||
| Therefore, we recommend the Conventional system. | ||||||
| Check | ||||||
| Grade | ||||||
| t | 0 | |||||
| 0 | 0 | |||||
| 0 | 0 | |||||
| 0 | ||||||
| 0 | ||||||
| 6 |
Solution
| City administration is considering refurbishing the lighting system of its administration building. | ||
| After initial investigation, the city procument office has narrowed down the choices into the following two options: | ||
| Option 1 is a Ergolight system, which costs $500,000 to purchase and instrall. | ||
| Option 2 is a convention system, which costs $100,000 to purchase and instrall. | ||
| The system is expected to last for 20 years | ||
| The energe and maintenance cost for Option 1 is $20,000 and $2,000. | ||
| The energe and maintenance cost for Option 1 is $50,000 and $10,000. | ||
| Assume all gas costs paid at end of year. | ||
| Discount rate: 4% | ||
| Which lighting system should the city selected based on financial consideration. | ||
| Note: please use LCC analysis to facilitate the decision-making. | ||
| Parameters/Assumptions | ||
| Urgolight | Conventional | |
| Discount rate | 4% | 4% |
| Economic life (year) | 20 | 20 |
| Purchansing price | $500,000 | $100,000 |
| Electricity costs/year | $20,000 | $50,000 |
| Maintenance/year | $2,000 | $10,000 |
| LCC Calculation | ||
| Costs | Urgolight | Conventional |
| Purchase | $500,000 | $100,000 |
| Electricity | $271,807 | $679,516 |
| Maintenance | $27,181 | $135,903 |
| LCC | $798,987 | $915,420 |
| Select One (with an "x") | ||
| Therefore, we recommend the Urgolight system. | ||
| Therefore, we recommend the Conventional system. | ||
Grade Worksheet
| 1.25 | Total Points Available | Item Grade Weight | x | A mark here makes the numbers in the grade calculation visible. | ||
| 0.25 | Base Points (for trying this exercise) | |||||
| 0 | Manual Points | |||||
| 1 | Points to be graded | |||||
| 0% | Percent all sheets | |||||
| 0.00 | Graded Points | |||||
| If these cells are blank, there are no cells requiring manual grading | ||||||
| 0.25 | Initial Grade | 0 | ||||
| 0.1 | Minimum Earned Points | |||||
| 0.35 | Threshold | |||||
| 0.00 | Grade | Grade Table | ||||
| A | 100% | |||||
| B | 90% | |||||
| C | 80% | |||||
| D | 70% | |||||
| F | 0% |
