A plant engineer wishes to know which of two types of lightbulbs should be used
ID: 2789090 • Letter: A
Question
A plant engineer wishes to know which of two types of lightbulbs should be used to light a warehouse. The bulbs that are currently used cost $41.60 per bulb and last 14,100 hours before burning out. The new bulb (at $55.6 per bulb) provides the same amount of light and consumes the same amount of energy, but it lasts twice as long. The labor cost to change a bulb is $18 00 The lights are on 20 hours a day, 365 da a year A sum hatt fimlsman a aral -40% . the firm's MARR is 17%, what is the maximum price (per bulb) the engineer should be willing to pay to switch to the new bulb? Round the service life of the old bulb to the nearest whole number. Click the icon to view the interest factors for discrete compounding when i-17% per year. The maximum price per new bulb the engineer should be willing to pay is S(Round to one decimal place.)Explanation / Answer
Given info Marginal tax rate 40% MARR 17% Required Output is 20h*365 Days 7300 Old Bulb Cost Output $41.60 14100 New Bulb $55.60 28200 Labor cost in changing bulb $18.00 = $55.60+$18.00 Total $73.60 MARR(Marginal accepted return) Marginal revenue = 17% Marginal Cost revenue = $73.60 *28200 Revenue $ 2,075,520 Actual cost $ 537,280.00 Profit $ 1,538,240 Marginal Tax rate 40%(profit) Tax $ 615,296.0 Marginal Revenue $ 922,944.0 MARR Marginal Revenue cash flow Marginal cost (1+r)^n MARR (1+0.17) 1.17 $922,944/1.17 = $ 788,841.03 Extra How much output is the new bulb is providing = Old output 14100 New output 28200 Extra 14100 $ 0.76 Marginal total cost $ 788,841.03 New cost*extra ouput $ 1,037,760.00 Extra cost =$788841.03/ $1037760 Extra cost $ 0.76 New price 73.60+0.76 New price $ 74.36 engineer new price willing to pay $ 74.36
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