Answer to Question #180365 in Microeconomics for samanwith bakki

Question

A plant engineer of refinery wishes to know which of two types of lightbulbs should be used to

light the control room. The bulbs that are currently used cost $45.90 per bulb and last 14,600

hours before burning out. The new bulb at $60 per bulb, provides the same amount of light and

consumes same amount of energy, but lasts twice as long. The labour cost to change a bulb is

$16. The lights are on 19 hours a day, 365 days a year. If the plant’s MARR is 15%, what is the

maximum price per bulb the engineer should be willing to pay to switch to the new bulb?

(Assume that the plants marginal tax rate is 40%).

Answer 1

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