An indium-gallium-arsenide-nitrogen alloy developed at Sandia National Laborator

Question

An indium-gallium-arsenide-nitrogen alloy developed at Sandia National Laboratory is said to have potential uses in electricity-generating solar cells. The new material is expected to have a longer life, and it is believed to have a 40% efficiency rate, which is nearly twice that of standard silicon solar cells. The useful life of a telecommunications satellite could be extended from 10 to 15 years by using the new solar cells. What rate of return could be realized if an extra investment now of $910,000 would result in extra revenues of $450,000 in year 11, $500,000 in year 12, and amounts increasing by $50,000 per year through year 15? The rate of return that could be realized was %.

Explanation / Answer

year

extra return

11

450000

12

500000

13

550000

14

600000

15

650000

sum of extra return

2750000

Average extra return = sum of extra return/ no of years

550000

Additional investment

910000

Average rate of return = average return/additional investment = 550000/910000

60.44%

year

extra return

11

450000

12

500000

13

550000

14

600000

15

650000

sum of extra return

2750000

Average extra return = sum of extra return/ no of years

550000

Additional investment

910000

Average rate of return = average return/additional investment = 550000/910000

60.44%

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