LED bulbs offer a fairly new lighting alternative, and are becoming increasingly popular in home lighting. These bulbs combine excellent energy efficiency with the “warm” light and dimming ability of incandescent lights. Although LED bulbs are expensive, manufacturers claim that subsequent savings will more than offset the initial costs. Analyze the relative cost of incandescent versus LED lighting, assuming that the information in the table below is accurate. Are industry claims of cost savings justified?

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Initial cost Electricity usage Electricity cost Lifetime LED $4.00 8 watts $0.04/kwh 25,000 hours Incandescent $0.75 60 watts $0.04/kwh 1,500 hours