Question

60 Watt incandescent lamp used 4 hours a day used about 88 kWh per year. If the kWh rate is $0.34 (about the current cost of diesel generation) then that is $30 per year in electricity cost. Life about 1 year (1460 hours) and costs about $1.50.

A 15 Watt CFL uses about 25 kWh per year costing $8.50 in electricity but provides about the same level of lighting. Life is about 5 years (7300 hours) and costs about $7.50For a 5-year period ..

calculate:

a)Present Value of an Incandescent light bulb(electricity and bulb cost)

b)Present Value of aCFL bulb (electricity and bulb cost)

c)The 5-year savings of switching to a CFL bulb

Answer 1

For 60 Watt Incandecent Lamp,

Cost = $1.50

Life = 1 years

Cost of Electricity per year = $30

Present Value of Incandescent Lamp,

PV = $1.5 + $30/ (1+0%) = $31.5 (here interest rate is not given, asuming 0% as interest rate)

Value for 5 years = $31.5* 5 = $157.5 (here since interest rate is 0, so discounting factor doesnt come into picture)

For 15 CFL Bulb,

Cost = $7.50

Life = 5 years

Cost of Electricity per year = $8.5

PV = $7.5 + $8.5*5 = $50

So total Savings = $157.5 - $50 = $107.5