ECON 132 Study Guide - Final Guide: Kilowatt Hour
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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 compact fluorescents or 60-watt incandescent, each giving an equivalent amount of lumens of light. The compact fluorescents cost $4.49 and last 8 years, while the incandescents cost $0.50 and last 1 year (thus have to be bought 8 times). However, the compact fluorescents save $4.96 per year in electricity costs. (This assumes that electricity costs 11 cents/kWh, lighting is used 2.75 hours per day x 365 days x 45watt savings.) Which light bulb should you use? Make the calculation using two different discount rates: 3% or 6%. You can use the Excel chart below to start your work. Print your results.
Cash Outlay for Investing in Lighting |
|||||||||
Year |
|||||||||
Option |
0 |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
A. Compact fluorescents |
-$4.49 |
||||||||
B. Incandescents |
-$0.50 |
-$0.50 |
-$0.50 |
-$0.50 |
-$0.50 |
-$0.50 |
-$0.50 |
-$0.50 |
|
Electricity Savings from compact fluorescents |
$4.96 |
$4.96 |
$4.96 |
$4.96 |
$4.96 |
$4.96 |
$4.96 |
$4.96 |
|
PV Savings w/ discount rate |
|||||||||
3.00% |
? |
? |
? |
? |
? |
? |
? |
? |
? |
6.00% |
? |
? |
? |
? |
? |
? |
? |
? |
? |