Ask Question
BusinessBusiness
2 May, 13:38

A university spent $1.8 million to install solar panels atop a parking garage. these panels will have a capacity of 500 kw, have a life expectancy of 20 years and suppose the discount rate is 10%. if electricity can be purchased for costs of $0.10 per kwh, how many hours per year will the solar panels have to operate to make this project break even? (hint: we need that the present value (pv) of the electricity generated by the solar panels be equal to the cost.)

+4
Answers (2)
  1. 2 May, 15:26
    0
    Present value refers to the current value of future sum of money given in a specified rate of return. It's also the concept that states that the worth of amount today is more than the same amount in future.

    This implies that the worth of money received in the future is not up to the worth of money received today. In this question, we are going to use present value to evaluate the project cost over a certain period of time.

    Let y represent the number of hours per year that the solar panel operates:

    And the energy produced yearly is 500*y which equals 500y

    The revenue saved per year is 500kwh*0.10/kwh which equals 50y, so the revenue saved is $50

    The discount rate is 10% and the number of period of years is 20years, therefore

    PV factor of annuity of $1=1/r * (1-1 / (1+r) ^n) = 1/10% * (1-1 / (1+10%) ^20) = 8.5136

    the PV value of revenue saved will be $50y*8.5136 (PV factor of annuity of $1) which equals 425.68y and since the cost of solar panel is $1,800,000, then the cost of solar panel will be equals to the PV of the revenue saved. i. e. 1800000=425.68y, which can be solved by y=1800000/425.68 which is 4228.55. so to break even, the solar power must operate at 4228.55 hours
  2. 2 May, 15:44
    0
    Making thе prеsеnt valuе (PV) οf thе еlеctricity gеnеratеd by thе sοlar panеls еqual tο thе cοst. Thе PV is thе 20 yеar discοuntеd valuе. Nοw making an assumptiοn that it οpеratеs fοr οnе hοur еach οf 20 yеars and gеnеratеs 500kwh fοr еach yеar. Lοοking at οnе hοur οf οpеratiοn еach yеar, it wοuld gеnеratеs (500kwh*$0.10/kwh) = $50 valuе οf еlеctricity pеr yеar. Nοw prеsеnt valuе wοuld bе as fοllοws:

    PV = $50 / (1+10%) + $50 / (1+10%) 2 + $50 / (1+10%) 3 + ... + $50 / (1+10%) 20

    PV = $50 / (1.1) + $50 / (1.1 2 + $50 / (1.1) 3 + ... + $50 / (1.1) 20

    PV = $425.68
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “A university spent $1.8 million to install solar panels atop a parking garage. these panels will have a capacity of 500 kw, have a life ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
What were some of the economic problems facing the world powers in the 1920s? Specifically, what factors led to the crash of 1929 and the depression that followed?
Answers (1)
The company is currently selling 8,000 units per month. Fixed expenses are $719,000 per month. The marketing manager believes that a $20,000 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales.
Answers (1)
Apparel purchased 90 new shirts and recorded a total cost of $2,644 determined as follows: Invoice cost $ 2,160 Shipping charges 194 Import taxes and duties 160 Interest (6.
Answers (1)
Which of the following is characteristic of games of chance? A They are based on ability. B Odds of house losing are high. C They are based on random occurrence. D Odds of gambler losing are high.
Answers (1)
If fixed costs do not change, then marginal cost A. equals the change in average variable cost divided by the change in output. B. equals the change in variable cost divided by the change in output. C.
Answers (1)
New Questions in Business
In many states, the minimum amount that stockholders must contribute to the corporation, and which is intended to protect the creditors of the corporation, is called the:
Answers (1)
Other things being equal, the monopolist will hire the same number of workers as a perfectly competitive industry would. hire fewer workers than if the industry were perfectly competitive.
Answers (1)
Which of the following statements is true about using fonts in business documents? A. Sans serif fonts, such as Arial, are best in business letters and emails. B. Use as many different types of fonts in a business letter as you can. C.
Answers (1)
In creating the Wii, how did Nintendo ensure a supply of complements that would motivate customers to adopt its new video game format? a. Nintendo made only a select number of games to run exclusively on the Wii system. b.
Answers (1)
Suppose that B2B, Inc., has a capital structure of 35 percent equity, 16 percent preferred stock, and 49 percent debt. Assume the before-tax component costs of equity, preferred stock, and debt are 14.5 percent, 11.0 percent, and 9.
Answers (1)
Home » Business » A university spent $1.8 million to install solar panels atop a parking garage. these panels will have a capacity of 500 kw, have a life expectancy of 20 years and suppose the discount rate is 10%. if electricity can be purchased for costs of $0.
Sign Up Forgot Password?