Compact fluorescent lamps (CFLs) have become more popular in recent years, but d

Question

Compact fluorescent lamps (CFLs) have become more popular in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent lightbulb costs $0.52 and lasts for 1,000 hours. A 15-watt CFL, which provides the same light, costs $3.75 and lasts for 12,000 hours. A kilowatt hour of electricity costs $0.128, which is about the national average. A kilowatt-hour is 1,000 watts for 1 hour. However, electricity costs actually vary quite a bit depending on location and user type. An industrial user in West Virginia might pay $0.04 per kilowatt-hour whereas a residential user in Hawaii might pay $0.25.

You require a return of 11 percent and use a light fixture 500 hours per year. What is the break-even cost per kilowatt-hour? (Do not round intermediate calculations and round your final answer to 6 decimal places. (e.g., 32.161616))

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Compact fluorescent lamps (CFLs) have become more popular in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent light bulb costs $0.45 and lasts 1,000 hours. A 15-watt CFL, which provides the same light, costs $3.40 and lasts for 12,000 hours. A kilowatt-hour of electricity costs $0.121, which is about the national average. A kilowatt-hour is 1,000 watts for 1 hour. If you require a 10 percent return and use a light fixture 500 hours per year, what is the equivalent annual cost of each light bulb?

Answer

To solve the EAC algebraically for each bulb, we can set up the variables as follows:
W = light bulb wattage
C = cost per kilowatt hour
H = hours burned per year
P = price the light bulb
The number of watts use by the bulb per hour is:
WPH = W / 920
And the kilowatt hours used per year is:
KPY = WPH

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