Light-emitting diode (LED) light bulbs have become required in recent years, but do they make financial sense? Suppose a typical 60-watt incadescentlight bulb costs $.45 and lasts for 1,000 hours. A 7-watt LED, which provides the same light, costs $2.25 and lasts for 40,000 hours. A kilowatt-hour of electricity costs $.121, which is about the national average. 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 10 percent return,at what cost per kilowatt-hour does it make sense to replace your incandescent bulbs toda