A university spent $1.8 million to install solar panels atop a parking garage. T

Question

A university spent $1.8 million to install solar panels atop a parking garage. These panels will have a capacity of 500kw, 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 2400 hours per year, would the project break even?

c. The university is seeking a grants to cover capital cost . How big of a grant would make this   project worthwhile (to the university)?

Explanation / Answer

1, for break even total fixed cost = total contribution ;

total contribution per year = $1.8 million/20;

total fixed cost = 500 *x*0.1*0.9;

x = hours per year ;

0.1 per kwh cost ;

1.8 *10^6/20 = 500 *x*0.1*0.9;

x= 2000 houra per year ;

2. if systems operate at 2400 hours per year break even would be abchieved earlier;

3.grant would be made to take care of the electricity bought ;

= 500*2400*0.1*0.9 - 500*20000.1*0.9 =$18,000 per year ;

amount to be grated = $18000per year

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.