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 $0.37 and lasts for 1,000 hours. A 15-watt CFL, which provides the same light, costs $3.00 and lasts for 12,000 hours. A kilowatt hour of electricity costs $0.113, 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 10 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))

Explanation / Answer

X $ per kWh be the cost of elctricity

For 60W incandescent lightbulb

Time, T1 = 1000/500 = 2 years

Initial Cost, P1 = 0.39$

Electricity Cost, E1 = 1000*X

For 15W CFL

T2 = 24 years

P2 = 3.10$

E2 = 12000X

Rate of return, R = 11%

Total Electricity Cost, E = 13000X

Return From incandescent lightbulb in 2 years, I = P1 + P1*R*T1/100 = 0.4758$

Return From CFL in 24 years, C = P2 + P2*R*T2/100 = 11.284$

For break even cost

X = I + C

13000X = 11.7598

X = 0.000905$ per kWh

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