Suppose you have just bought a new house and are considering the installation of

Question

Suppose you have just bought a new house and are considering the installation of 10 compact fluorescent bulb (CFB) fixtures instead of the 10 conventional incandescent lighting fixtures which cost a total of $450 typically installed by the builder. According to the home builder, CFBs use 75% less electricity than incandescent bulbs, and they last 10 times longer before the bulb needs replacement. Bob calculates that 1,100 watts of incandescent lighting will be required in the house for 2,750 hours of usage per year. The cost of electricity is $0.10 per kWh. Also, each CFB will save 150 pounds of Co2 per year. Each pound of CO2 has a penalty of $0.01. If incandescent bulbs cost $0.80 each and last for one year, use a 10-year study period to determine the maximum cost of CFB fixtures and bulbs at can be justified in this house. MARR-7% per year. Click the icon to view the interest and annuity table for discrete compounding when i: 7% per year. The maximum cost of the CFB fixtures and bulbs is Sper CFB. (Round to the nearest dollar.)

Explanation / Answer

Assumptions:

Calculation tables:

MARR 7% Time 10 years Option1 (Conventional incandescent bulb) Option2 (CFB) time Time Cost of bulb (10bulbs) $8.00 1year Cost of installation ?? 10 years Total cost of bulb $80.00 10 years Pv( Total bulb cost) -$52.12 Cost of bulb + installation -$502.12 Power Consumption ( 1100 watts (1.1kw) for 2750 hours)=> kwh 3025 Power Consumption ( 25% of CIB )=> kwh 756.25 Cost of power consumption -$302.50 1 year Cost of power consumption -$75.63 1 year PV ( cost of power consumption) -$1,749.71 10 year PV ( cost of power consumption) -$437.46 10 years CO2 penalty saving(150 pound /year) 1.5 1 year PV (CO2 penalty) 8.68 Net cash flow ( at Present value term) -$2,251.83 Net cash flow ( at Present value term) -$428.78 Cost of Installation $1,823.05 Cost of bulb + installation (per bulb) $182.31

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