15 ### Lightbulb Cost Analysis for Industrial Application**Context:** A plant engineer wishes to determine which of two types of lightbulbs should be used to light the workspace. The bulbs that are currently used cost $43.00 per bulb and last 14,600 hours before burning out. The new bulb (priced at $82.9 per bulb) provides the same amount of light and consumes the same amount of energy but lasts twice as long. The labor cost to change a bulb is $17.00. The lights are on for 19 hours a day, 365 days a year. Assume that the firm's marginal tax rate is 25%. If the firm's Minimum Attractive Rate of Return (MARR) is 18%, what is the maximum price (per bulb) the engineer should be willing to pay to switch to the new bulb? Round the service life of the old bulb to the nearest whole number.**Instructions:** 1. **Evaluate Cost Factors**: Consider both initial costs and long-term savings associated with reduced replacement frequency. 2. **Tax and Depreciation**: Factor in the company's marginal tax rate (25%). 3. **Time Value of Money**: Use the MARR of 18% to determine the present worth of future savings. 4. **Operational Details**: Lights operate for 19 hours a day all year round (365 days).**Calculation Step-by-Step**: To find the maximum price per new bulb that the engineer should be willing to pay, use the present worth (PW) of the cost savings due to the longer lifespan of the new bulb. Evaluate this using the provided MARR.#### Financial Overview Table| **Factor/Years (N)** | **1** | **2** | **3** | **4** | **5** | **6** | **7** | **8** | **9** | **10** ||:--------------------:|:----------:|:----------:|:----------:|:----------:|:----------:|:----------:|:----------:|:----------:|:----------:|:----------:|| **Single Payment** | | | | | | | | | | || **Compound Amount** | 1.1800 | 1.3924 | 1.6434

The Minimum Acceptable Rate of Return (MARR) is the rate of return that a company uses to compare…

A plant engineer wishes to know which of two types of lightbulbs should be used to light a warehouse. The bulbs that are currently used cost $43.00 per bulb and last 14,800 hours before burning out. The new bulb (at $82.9 per bulb) provides the same amount of light and consumes the same amount of energy, but it lasts twice as long. The labor cost to change a bulb is $17.00. The lights are on 19 hours a day, 365 days a year. (Assume that the firm's marginal tax rate is 25%) If the firm's MARR is 18%, what is the maximum price (per bulb) the engineer should be willing to pay to switch to the new bulb? Round the service life of the old bulb to the nearest whole number. Click the icon to view the interest factors for discrete compounding when i=18% per year. The maximum price per new bulb the engineer should be willing to pay is $- (Round to one decimal place.) X More Info Single Payment Equal Payment Series Present Compound Amount Factor Sinking Fund Factor Worth Factor Capital Recovery Factor (A/P, i, N) (F/A, i, N) (A/F, i, N) (P/A, i, N) 1.0000 1.0000 0.8475 1.1800 2.1800 0.4587 1.5658 0.6387 212 N 2 Compound Amount Factor (FP, i, N) 1.1800 1.3924 Present Worth Factor (P/F, i, N) 0.8475 0.7182

A plant engineer wishes to know which of two types of lightbulbs should be used to light a warehouse. The bulbs that are currently used cost $43.00 per bulb and last 14,800 hours before burning out. The new bulb (at $82.9 per bulb) provides the same amount of light and consumes the same amount of energy, but it lasts twice as long. The labor cost to change a bulb is $17.00. The lights are on 19 hours a day, 365 days a year. (Assume that the firm's marginal tax rate is 25%) If the firm's MARR is 18%, what is the maximum price (per bulb) the engineer should be willing to pay to switch to the new bulb? Round the service life of the old bulb to the nearest whole number. Click the icon to view the interest factors for discrete compounding when i=18% per year. The maximum price per new bulb the engineer should be willing to pay is $- (Round to one decimal place.) X More Info Single Payment Equal Payment Series Present Compound Amount Factor Sinking Fund Factor Worth Factor Capital Recovery Factor (A/P, i, N) (F/A, i, N) (A/F, i, N) (P/A, i, N) 1.0000 1.0000 0.8475 1.1800 2.1800 0.4587 1.5658 0.6387 212 N 2 Compound Amount Factor (FP, i, N) 1.1800 1.3924 Present Worth Factor (P/F, i, N) 0.8475 0.7182

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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