Chapter 10, Problem 25QP

Equivalent Annual Cost [LO4] Compact fluorescent lamps (CFLs) have become required in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent lightbulb costs $.45 and lasts for 1,000 hours. A 15-watt CFL, which provides the same light, costs $3.40 and lasts for 12,000 hours. A kilowatt-hour of electricity costs $.121, which is about the national average. A kilowatt-hour is 1,000 watts for 1 hour. If you require a 10 percent return and use a light fixture 500 hours per year, what is the equivalent annual cost of each lightbulb?