Evaluate the economics of three light bulb options with the following characteristics: Bulb style Incandescent CFL...

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Evaluate the economics of three light bulb options with the following characteristics: Bulb style Incandescent CFL LED Unit cost ($/bulb) Energy consumption (W) Life (hr) 100 23 19 0.30 1.50 6 Use the following additional data for this problem: Residential electricity cost (8/kWh) 0.12 3 345 0.06 2.50 Bulb use (hr/day) Days of use/year Discount rate Cost of changing bulb (8) 750 7,000 18,000 Calculate the total annual cost of each option, which comprises the sum of the annualized bulb cost and the annual electricity cost. To calculate the annualized cost of the bulb, first calculate the bulb lifetime in years, and then use that value as the "number of periods" argument in the PMT function. The cost of changing the bulb is labor cost incurred each time a bulb is changed. To get total bulb cost, this labor cost should be added to the bulb cost for each change. Assume all values are in real terms. Once you have the solution to the base problem, do the following breakeven and sensitivity analyses: (a) Suppose the bulb is going to a very low usage spot like a closet such that the anticipated usage is 0.5 hours/day for 100 days/year. How does that change your results? (b) What is the breakeven LED bulb price between the LED and CFL option? (c) What is the breakeven interest rate between the LED and CFL? How do you interpret this interest rate? (d) Suppose that there is a carbon tax that increases electricity price by 30%. Does that change the ranking of the alternatives in terms of total cost? Evaluate the economics of three light bulb options with the following characteristics: Bulb style Incandescent CFL LED Unit cost ($/bulb) Energy consumption (W) Life (hr) 100 23 19 0.30 1.50 6 Use the following additional data for this problem: Residential electricity cost (8/kWh) 0.12 3 345 0.06 2.50 Bulb use (hr/day) Days of use/year Discount rate Cost of changing bulb (8) 750 7,000 18,000 Calculate the total annual cost of each option, which comprises the sum of the annualized bulb cost and the annual electricity cost. To calculate the annualized cost of the bulb, first calculate the bulb lifetime in years, and then use that value as the "number of periods" argument in the PMT function. The cost of changing the bulb is labor cost incurred each time a bulb is changed. To get total bulb cost, this labor cost should be added to the bulb cost for each change. Assume all values are in real terms. Once you have the solution to the base problem, do the following breakeven and sensitivity analyses: (a) Suppose the bulb is going to a very low usage spot like a closet such that the anticipated usage is 0.5 hours/day for 100 days/year. How does that change your results? (b) What is the breakeven LED bulb price between the LED and CFL option? (c) What is the breakeven interest rate between the LED and CFL? How do you interpret this interest rate? (d) Suppose that there is a carbon tax that increases electricity price by 30%. Does that change the ranking of the alternatives in terms of total cost?

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Here are the calculations for the economics of the three light bulb options Incandescent Bulb life 7... View the full answer