A plant engineer wishes to know which of two types of light bulbs should be used

Question

A plant engineer wishes to know which of two types of light bulbs should be used to light a warehouse. The bulbs currently used cost $45.00 per bulb and last 14,600 hours before burning out. The new bulb ($60/bulb) provides the same amount of light and consumes the same amount of energy but lasts twice as long. The labor cost to change a bulb is $16.00. The lights are on 19 hrs/day, 365 days/yr. MARR=15%. What is the maximum price per new bulb below which the engineer should switch to the new bulb. (Break enven price) (choose the closest to correct answer)

Explanation / Answer

Total hours requirement = 365*19= 6935hrs/year

number of days current bulb will last = 14600/19= 768.4211 days ~ 2 years

Number of days ne bulb last = 2*14600/19 ~4 years

Total cost of using current bulb for 4 years = 45 +16 + (45+16)/1.15=114.0435

Let maximum price of new bulb be x

Total cost of using current bulb for 4 years = x+16

x+16< 114.0435

x<98

5.

$98

5.

$98

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