Define comparision of net present values

Reference no: EM13145009

A high efficiency light bulb consumes 25 watts per hour, costs $4.25 and has an expected life of 8,000 hours. It produces the same light output as a typical incandescent light bulb that consumes 100 watts, costs $1.00 for a 4 pack and has an expected life of 1,000 hours. A 4 pack is purchased initally, and another 4 pack is purchased after two years. Either bulb will be used for 2,000 hours per year at an electricity cost of $0.14/kwh (kilowatt-hour). If the interest rate is 6%, which bulb is more cost effective over 8,000 hours of use based upon a comparision of Net Present Values?

Reference no: EM13145009

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