Zandri Industries is evaluating whether to invest in solarpanels to provide some of the electrical needs of its mainoffice building in Buffalo, New York. The solar panel projectwould cost $475,000 and would provide cost savings in itsutility bills of $45,000 per year. It is anticipated that the solarpanels would have a life of 15 years and would have noresidual value.(Click the icon to view the present value factor table.)(Click the icon to view the present value annuity factortable.).(Click the icon to view the future value factor table.)(Click the icon to view the future value annuity factorRead the requirements.table.)Requirement 1. Calculate the payback period in years of the solar panel project.Determine the formula, then calcuste the payback period. (Round your answer to two decimal places.)Initial investmentExpected annual net cash inflowPayback period%3D%24475,000$445,00010.56 yearsRequirement 2. If the company uses a discount rate of 10%, what is the net present value of this project? (Round youranswer to the nearest whole dollar. Use parentheses or a minus sign for a negative net present value.)The net present value of the project is%24 i Requirementsouren- to1. Calculate the payback period in years of the solar panel project.2. If the company uses a discount rate of 10%, what is the net present value of this project?3. If the company has a rule that no projects will be undertaken that have a payback period ofmore than five years, would this investment be accepted? If not, what arguments could theenergy manager make to try to obtain approval for the solar panel project?4. What would you do if you were in charge of approving capital investment proposals?et pPrintDone

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1. Calculate the payback period in years of the solar panel project. 2. If the company uses a discount rate of 10%, what is the net present value of this project? 3. If the company has a rule that no projects will be undertaken that have a payback period of more than five years, would this investment be accepted? If not, what arguments could the energy manager make to try to obtain approval for the solar panel project? 4. What would you do if you were in charge of approving capital investment proposals?

1. Calculate the payback period in years of the solar panel project. 2. If the company uses a discount rate of 10%, what is the net present value of this project? 3. If the company has a rule that no projects will be undertaken that have a payback period of more than five years, would this investment be accepted? If not, what arguments could the energy manager make to try to obtain approval for the solar panel project? 4. What would you do if you were in charge of approving capital investment proposals?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 10P

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