Question

READ ONLY - This is an older file format. To make changes, make a copy of the file in the new format Upgrade a copy Dismiss 2) (30 points) Suppose you are the physical plant manager for a new hotel with many light fixtures. You need to decide if you should use 15 watt LED bulb or a 70 watt A19 halogen bulbs, each giving equivalent amount of lumens of light. The LED bulb costs $3.37 and the A19 halogen blub costs $1.06. The LED lasts 10 years and the A19 halogen bulb last roughly one year, so it will need to be purchased 10 times. (note that the last (10) halogen bulb will be purchased at the end of year 9 and will be used for Jan. 1 to Dec. 31 of year 10) Assume that each bulb is used 3 hours per day in your house. Search the city of Denton's website (or use some search engine) to find the cost per KWh charged by Denton Municipal Electric for the summer months of 2020 and assume that this will be the charge year round for the next 10 years. (Hint: the costs per kWh will be between 5 cents and 10 cents.) Calculate the present value (use a 4% discount rate) of the lifetime cost of each bulb. You can use this table as a template. It will be easiest to do this in Excel. interest rate 4.00% Cash Outlay for Investing in Lighting Year 0 1 2 3 4 5 6 7 8 9 10 Total Option A. LED 15 watt Present Value 3.37 ? ? ? ? ? 2 ? ? ? ? ? I ? ? ? ? ? ? ? ? ? ? ? ? 1.06 ? ? ? ? ? ? B. Halogen 70 watt Present Value ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 5:58 PM 9/18/2020

Answer 1

	Using Average Elctricity rate of $0.09 per KWh as given in Denton Site.
	Taking the time horizon of 1 years for even comparability.
	Calculating Electricty cost for each bulb	LED 15W	Halogen 70W
a	Usage per day in Hrs	3	3
b	Usage per year (365 days) in Hrs	1,095	1,095
c	Rating in KW	0.015	0.07
d	Annual KWh consumed=b*c=	16.43	76.65
e	Rate per KWh	$                   0.09	$        0.09
f	Total Electricity cost per year	$                   1.48	$        6.90

Cost outlay of 2 bulb types:
Particulars	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
LED 15W costs
LED 15 W bulb +electricty cost	$                   3.37	$        1.48	$        1.48	$           1.48	$         1.48	$     1.48	$     1.48	$     1.48	$     1.48	$     1.48	$     1.48
PV Factor @4%=1/1.04^n=	1	0.9615	0.9246	0.8890	0.8548	0.8219	0.7903	0.7599	0.7307	0.7026	0.6756
PV of Costs	$                   3.37	$        1.42	$        1.37	$           1.31	$         1.26	$     1.21	$     1.17	$     1.12	$     1.08	$     1.04	$     1.00
PV of Life time costs=Sum of PVs	$                 15.36
Halogen Costs
Halogen 70W	$                   1.06	$        1.06	$        1.06	$           1.06	$         1.06	$     1.06	$     1.06	$     1.06	$     1.06	$     1.06
Electricity cost annual		$        6.90	$        6.90	$           6.90	$         6.90	$     6.90	$     6.90	$     6.90	$     6.90	$     6.90	$     6.90
Total Operating Cost	$                   1.06	$        7.96	$        7.96	$           7.96	$         7.96	$     7.96	$     7.96	$     7.96	$     7.96	$     7.96	$     6.90
PV Factor @4%=1/1.04^n=	1	0.9615	0.9246	0.8890	0.8548	0.8219	0.7903	0.7599	0.7307	0.7026	0.6756
PV of Costs	$                   1.06	$        7.65	$        7.36	$           7.08	$         6.80	$     6.54	$     6.29	$     6.05	$     5.82	$     5.59	$     4.66
PV of Life time costs=Sum of PVs	$                 64.89