Compact fluorescent lamps (CFLs) have become required in recent years, but do th

Question

Compact fluorescent lamps (CFLs) have become required in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent lightbulb costs $.41 and lasts for 1,000 hours. A 15-watt CFL, which provides the same light, costs $3.20 and lasts for 12,000 hours. A kilowatt hour of electricity costs $.117, 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 $.04 per kilowatt-hour whereas a residential user in Hawaii might pay $.25.

You require a return of 9 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 answer to 6 decimal places, e.g., 32.161616.)

You require a return of 9 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 answer to 6 decimal places, e.g., 32.161616.)

Explanation / Answer

Details All Amounts in $ CFL Year 1 Initial Cost CFL 3.2 Initial cost Incandescent lamp 0.41 Cost Differential 2.79 Operating Hr 500 CFLpower consumption in Watt @ 15watt                                     7,500 Equivalent KWH 7.5 Incandescent Lamp power consumption in watt                                   30,000 Equivalent KWH 30 Assuming break even requied in a year KWH difference in a year 22.5 Let the kwh rate is $x per kwh So differential cost 22.5x PV of differential cost =22.5x/1.09 PV of differential cost = Differential initial cost Or , 25.5x/1.09=2.79 Or, x=0.135 So break even rate is $ 0.135/kwh

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