What would you recommend to the city and why

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Reference no: EM131558813

Baltimore is considering a purchase of LED Christmas lights for the city's tree. Each string of 500 LED Christmas lights will cost the city $35 but will have a life expectancy of 10 years and use only $30 worth of electricity per year. The city currently uses the old-fashioned, incandescent Christmas lights that cost only $5 per string of 500 lights, but the city has to replace them annually and each string uses $63 worth of electricity per year. The city asked you to assess the costs and benefits of this project. If the city's annual cost of capital is 6% and the city will need to purchase 10,000 strings of lights.

What would you recommend to the city and why?

Note, the city requires that you present financial evidence to support your recommendation.

Reference no: EM131558813

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