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 $0.46 and lasts for 1,000 hours. A 15-watt CFL, which provides the same light, costs $3.45 and lasts for 12,000 hours. A kilowatt hour of electricity costs $0.122, 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?

Explanation / Answer

AVerage power cost basis:

Cost per hr for lightbulb = (0.46 + 60*1000/1000*0.122) / 1000 = .00778

Cost per hr for CFL = (3.45 + 12000*15/1000*0.122) / 12000 = .002118

CFL is less costly

COst in west virginia region:

Cost per hr for lightbulb = (0.46 + 60*1000/1000*0.04) / 1000 = .00286

Cost per hr for CFL = (3.45 + 12000*15/1000*.04) / 12000 = .000888

CFL cost is lesser.

COst in Hawaii region:

Cost per hr for lightbulb = (0.46 + 60*1000/1000*0.25) / 1000 = .01546

Cost per hr for CFL = (3.45 + 12000*15/1000*.25) / 12000 = .004038

CFL cost is lesser.

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