Low-energy lightbulbs typically cost $3.60, have a life of nine years, and use about $2.00 of electricity

Question:

Low-energy lightbulbs typically cost $3.60, have a life of nine years, and use about $2.00 of electricity a year. Conventional lightbulbs are cheaper to buy, for they cost only $.60. On the other hand, they last only about a year and use about $7.00 of energy. If the real discount rate is 4%, which product is cheaper to use?

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...