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