### Compact fluorescent lamps-break-even cost

Assignment Help Financial Management
##### Reference no: EM131352323

Compact fluorescent lamps (CFLs) have become required in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent lightbulb costs \$.35 and lasts for 1,000 hours. A 15-watt CFL, which provides the same light, costs \$2.90 and lasts for 12,000 hours. A kilowatt-hour is 1,000 watts for 1 hour. Suppose you have a residence with a lot of incandescent bulbs that are used on average 500 hours a year. The average bulb will be about 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 9 percent return, at what cost per kilowatt-hour does it make sense to replace your incandescent bulbs today? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 6 decimal places, e.g., 32.161616.)

Break-even cost ______\$

#### Questions Cloud

 Formulate linear programming model-projected annual return : Michael has decided to invest \$40,000 in three types of funds. Fund A has projected an annual return of 8 percent, Fund B has projected an annual return of 10 percent, and Fund C has projected an annual return of 9 percent. Formulate a linear program.. What is the project net present value : A project is expected to create operating cash flows of \$29,500 a year for three years. The initial cost of the fixed assets is \$61,000. These assets will be worthless at the end of the project. An additional \$4,500 of net working capital will be req.. Tunney industries can issue perpetual preferred stock : Tunney Industries can issue perpetual preferred stock at a price of \$56.00 a share. The stock would pay a constant annual dividend of \$7.00 a share. What is the company's cost of preferred stock, rp? What is the cost of preferred stock-including flotation : Trivoli Industries plans to issue perpetual preferred stock with an \$11.00 dividend. The stock is currently selling for \$110.50; but flotation costs will be 6% of the market price, so the net price will be \$103.87 per share. What is the cost of the p.. Compact fluorescent lamps-break-even cost : Compact fluorescent lamps (CFLs) have become required in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent lightbulb costs \$.35 and lasts for 1,000 hours. If you require a 9 percent return, at what cost per kilowa.. What is depreciation tax shield : What is the depreciation tax shield? Requires initial fixed asset investment : Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of \$2.46 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be w.. What is aftertax salvage value of the asset : An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of \$6,120,000 and will be sold for \$1,320,000 at the end of the project. If the tax rate is 34 percent, what is the aftertax s.. What is the estimated maximum annual debt service : If a lender feels that \$950,000 is a reasonable estimate of a property’s first year NOI and has a lending policy of a minimum debt service coverage of 1.25, what is the estimated maximum annual debt service? If the loan is a fixed rate loan priced at..

### Write a Review

#### Residual dividend policy results-consistent dividend stream

Which of the following is true? a. In industries with volatile earnings, the residual dividend policy results in the most consistent dividend stream. b. If the clientele effect is correct, firms should follow a constant dividend payout ratio policy. ..

#### Taxes important in distributions to stockholders

Why is the question of taxes important in distributions to stockholders? What does today’s tax environment suggest about the preference for one versus the other? What might a firm that holds abnormally large cash balances likely suggest to shareholde..

#### Calculate call value of owens corning warrants

When Owens Corning emerged from bankruptcy in 2006, the debt holders became the sole owners of the company. But the old stockholders were not left entirely empty handed. They were given warrants to buy the new common stock at any point in the next se..

#### Paying dividends-what is the current share price

Estes Park Corp. pays a constant \$9.20 dividend on its stock. The company will maintain this dividend for the next 8 years and will then cease paying dividends forever. If the required return on this stock is 12 percent, what is the current share pri..

#### What is its intrinsic value

Company XYZ is expected to grow at 10% annually forever, and its dividend in the next 12 months is expected to be \$2.50, and its required rate of return is 17.5%. What is its intrinsic value? If the current price is equal to its intrinsic value, what..

#### Firm maintains a separate account for cash disbursements

Cash Management. A firm maintains a separate account for cash disbursements. Total disbursements are \$100,000 per month, spread evenly over the month. Administrative and transaction costs of transferring cash to the disbursement account are \$10 per t..

#### What amount of new investment income could be generated

If Crappola earns 9.5% on invested funds, what amount of new investment income could be generated on an annual basis?

#### What is your estimate of expected return for these? bonds

In? mid-2012, Ralston Purina had? AA-rated, 10-year bonds outstanding with a yield to maturity of 1.96%. What is the highest expected return these bonds could? have? At the? time, similar maturity Treasuries had a yield of 0.96%. If you believe Ralst..

#### Compute the correlation between a and the market

Compute the correlation between A and the market, and B and the market. Compute the systematic risk β CAPM expected return for your choice in part (b). Why is it less than 10% and explain in the context of systematic and total risk.

#### How much you have accumulated in account at the end

How much will you have accumulated in the account at the end of the following number of years?- Compare and contrast your findings in part (b).

#### All price changes are due to exchange rate changes

In 1983 the Japanese yen-U.S. dollar exchange rate was 240 yen per dollar, and the dollar cost of a compact Japanese-manufactured car was \$8,250. Suppose that now the exchange rate is 108 yen per dollar.

#### Calculate cash flow from operating activities

Given the following selected information on Cicalese’s Chocolate, Inc., calculate Cash Flow from Operating Activities for the year 20X1.