Compare the economics of the two alternatives

Reference no: EM131507164

Question: Refer to Problem. Disposing of incandescent light bulbs is just like getting rid of and recycling glassware in general. However, this is not the case for CFLs. Disposing of CFLs is complicated by the fact that each lamp contains a small amount of mercury, which is a very environmentally dangerous substance. Write a brief report of your findings for your boss for each of the following scenarios:

a. Develop an Excel spreadsheet to investigate the sensitivity of choice of lighting systems when the CFL disposal cost varies from $1.00 to $5.00 per lamp.

b. Use your spreadsheet to explore the sensitivity of bulb or lamp choice as the cost of electricity varies from $0.04 per kWh to $0.16 per kWh.
c. Use your spreadsheet to quantify the sensitivity of bulb or lamp choice when CFLs last 5, 6, 7, 8, 9, and 10 times as long as incandescent bulbs.

Problem: Your boss has asked you to evaluate the economics of replacing 1,000 60-Watt incandescent light bulbs (ILBs) with 1,000 compact fluorescent lamps (CFLs) for a particular lighting application. During your investigation you discover that 13-Watt CFLs costing $2.00 each will provide the same illumination as standard 60-Watt ILBs costing $0.50 each. Interestingly, CFLs last, on average, eight times as long as incandescent bulbs. The average life of an ILB is one year over the anticipated usage of 1,000 hours each year. Each incandescent bulb costs $2.00 to install/replace. Installation of a single CFL costs $3.00, and it will also be used 1,000 hours per year. Electricity costs $0.12 per kiloWatt hour (kWh), and you decide to compare the two lighting options over an 8-year study period. If the MARR is 12% per year, compare the economics of the two alternatives and write a brief report of your findings for the boss.

Reference no: EM131507164

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