Break-Even Cost The previous problem suggests that using CFLs instead of incandescent bulbs is a no-brainer. However, electricity costs actually vary quite a bit depending on location and user type (you can get information on your rates from your local power company). An industrial user in West Virginia might pay $0.04 per kilowatt-hour whereas a residential user in Hawaii might pay $0.25. What’s the break-even cost per kilowatt-hour in Problem 27?

Problem 27

Equivalent Annual Cost Compact fluorescent lamps (CFLs) have become more popular in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent light bulb costs $0.50 and lasts 1,000 hours. A 15-watt CFL, which provides the same light, costs $3.50 and lasts for 12,000 hours. A kilowatt-hour of electricity costs $0.101, 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 light bulb?