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%. a. 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? b. If efficient systems operate for 2,400 hours per year, would the project break even? c. The university is seeking a grant to cover capital costs. How big of a grant would make this project worthwhile (to the university)?
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%. a. 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? b. If efficient systems operate for 2,400 hours per year, would the project break even? c. The university is seeking a grant to cover capital costs. How big of a grant would make this project worthwhile (to the university)?
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 10P
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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%.
a. 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?
b. If efficient systems operate for 2,400 hours per year, would the project break even?
c. The university is seeking a grant to cover capital costs. How big of a grant would make this project worthwhile (to the university)?
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