Light emitting diodes (LED) light bulbs have become required in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent light bulb costs $.49 and lasts 1,000 hours. A 15-watt LED, which provides the same light, costs $3.60 and lasts for 12,000 hours. A kilowatt-hour of electricity costs $.125. A kilowatt-hour is 1,000 watts for 1 hour. If you require a return of 11 percent and use a light fixture 500 hours per year, what is the equivalent annual cost of each light bulb?

60-Watt bulb:

LED bulb: