Question

Light emitting diode (LEDs) light bulbs have become required in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent light bulb costs $.52 and lasts for 1,000 hours. A 15-watt LED, which provides the same light, costs $3.75 and lasts for 12,000 hours. A kilowatt hour of electricity costs $.128. 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 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 answer to 6 decimal places, e.g., 32.161616.) Break-even cost

Answer 1

В D 15 Assume, Break-even cost is C. 16 Equated annual cost function of 60 watt bulb: (-0.52-60/1000)x500xC)x(PVIFA11%,2))=(PVIFA11%,2) 17 Equated annual cost function of 60 watt bulb: |(-0.52-(60/1000)x500xC)x1.71252333414496):(1.71252333414496) ......(1) 18 19 Equated annual cost function of 15 watt CFL: (-3.75-((15/1000)x500xC)x(PVIFA11%,24))=(PVIFA11%,24) 20 Equated annual cost function of 15 watt CFL: |(-3.75-((15/1000)x500xC)*8.34813657778026):8.34813657778026) .......(2) 21 22 Equate equations (1) and (2) 23 (-0.52-((60/1000)x500xC)x1.71252333414496)-(1.71252333414496)=(-3.75-(15/1000)x500xC)x8.34813657778026):8.34813657778026) 24 25 On solving 26 Break-even cost, C is $0.006469

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