Light emitting diode (LEDs) light bulbs have become required inrecent years, but do they make financial sense? Suppose a typical60-watt incandescent light bulb costs $.49 and lasts for 1,000hours. A 15-watt LED, which provides the same light, costs $3.60and lasts for 12,000 hours. A kilowatt hour of electricity costs$.125. A kilowatt-hour is 1,000 watts for 1 hour. However,electricity costs actually vary quite a bit depending on locationand user type. An industrial user in West Virginia might pay $.04per kilowatt-hour whereas a residential user in Hawaii might pay$.25.

You require a return of 11 percent and use a light fixture 500hours per year. What is the break-even cost per kilowatt-hour?(Do not round intermediate calculations and round youranswer to 6 decimal places, e.g., 32.161616.)

Light emitting diode (LED) light bulbs have become required inrecent years, but do they make financial sense? Suppose a typical60-watt incandescent light bulb costs $.51 and lasts for 1,000hours. A 15-watt LED, which provides the same light, costs $3.70and lasts for 12,000 hours. A kilowatt-hour is 1,000 watts for 1hour. Suppose you have a residence with a lot of incandescent bulbsthat are used on average 500 hours a year. The average bulb will beabout halfway through its life, so it will have 500 hours remaining(and you can’t tell which bulbs are older or newer).

If you require a return of 10 percent, at whatcost per kilowatt-hour does it make sense to replace yourincandescent bulbs today? (A negative answer should beindicated by a minus sign. Do not roundintermediate calculations and round your answer to 6 decimalplaces, e.g., 32.161616.)

Martin Enterprises needs someone to supply it with 121,000cartons of machine screws per year to support its manufacturingneeds over the next five years, and you’ve decided to bid on thecontract. It will cost you $800,000 to install the equipmentnecessary to start production; you’ll depreciate this coststraight-line to zero over the project’s life. You estimate that,in five years, this equipment can be salvaged for $148,000. Yourfixed production costs will be $445,000 per year, and your variableproduction costs should be $10.20 per carton. You also need aninitial investment in net working capital of $71,000. If your taxrate is 22 percent and you require a return of 10 percent on yourinvestment, what bid price should you submit? (Do not roundintermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.)

A five-year project has an initial fixed asset investment of$300,000, an initial NWC investment of $28,000, and an annual OCFof ?$27,000. The fixed asset is fully depreciated over the life ofthe project and has no salvage value. If the required return is 11percent, what is this project’s equivalent annual cost, or EAC?(A negative answer should be indicated bya minus sign. Do not round intermediatecalculations and round your answer to 2 decimal places, e.g.,32.16.)