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 $0.39 and lasts for 1,000 hours. A 15-watt CFL, which provides the same light, costs $3.10 and lasts for 12,000 hours. A kilowatt hour of electricity costs $0.115, 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))

Break-even cost $

Explanation / Answer

Kilowatt hour = 1,000 watts per hour.
60-watt light bulb burning for 500 hours per year = 1 year

60-watt bulb will last for 1,000 hours = 2 years
15 watt CFL will last for 12000 hours = 12000/500 =24 years
Rate = 11%

60-watt bulb burning for 500 hours per year uses = 30,000 watt hours, or 30 kilowatt hours

15-watt CFL burning for 500 hours per year uses = 7,500 watts, or 7.5 kilowatts.  
Breakeven electricity cost under these circumstances is:
[–$0.39 – (30 × C)PVIFA11%,1] / PVIFA11%,1
= [–$3.10 – (7.5 × C)PVIFA11%,24] / PVIFA11%,24
[–$0.39 – (30 × C) x 1.1100 / 1.1100
= [–$3.10 – (7.5 × C)x 12.239] / 12.239
C =

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.