A Steel Company Wishes to Replace the Lighting in Its

Multiple Choice

A steel company wishes to replace the lighting in its warehouse with an energy efficient LED system.Installing the new lighting system will cost $1.5 million,but is expected to generate a cost savings of $140,000 per year for the next 25 years,when the new lights will need to be replaced.If the steel company has a cost of capital of 6%,what is the NPV of this investment?

A) $289,670
B) $2 million
C) -$1.5 million
D) $140,000
E) $1,789,670