A university spent $1.3 million to install solar panels atop a parking garage. T

Question

A university spent $1.3 million to install solar panels atop a parking garage. These panels will have a capacity of 400 kilowatts (kW) and have a life expectancy of 20 years. Suppose that the discount rate is 30%, that electricity can be purchased at $0.20 per kilowatt-hour (kWh), and that the marginal cost of electricity production using the solar panels is zero. Hint: It may be easier to think of the present value of operating the solar panels for 1 hour per year first. Approximately how many hours per year will the solar panels need to operate to enable this project to break even? 6,371.11 4,900.85 2,450.43 5,881.02 If the solar panels can operate only for 4,411 hours a year at maximum, the project    break even. Continue to assume that the solar panels can operate only for 4,411 hours a year at maximum. In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of at least A university spent $1.3 million to install solar panels atop a parking garage. These panels will have a capacity of 400 kilowatts (kW) and have a life expectancy of 20 years. Suppose that the discount rate is 30%, that electricity can be purchased at $0.20 per kilowatt-hour (kWh), and that the marginal cost of electricity production using the solar panels is zero. A university spent $1.3 million to install solar panels atop a parking garage. These panels will have a capacity of 400 kilowatts (kW) and have a life expectancy of 20 years. Suppose that the discount rate is 30%, that electricity can be purchased at $0.20 per kilowatt-hour (kWh), and that the marginal cost of electricity production using the solar panels is zero. Hint: It may be easier to think of the present value of operating the solar panels for 1 hour per year first. Approximately how many hours per year will the solar panels need to operate to enable this project to break even? 6,371.11 4,900.85 2,450.43 5,881.02 If the solar panels can operate only for 4,411 hours a year at maximum, the project    break even. Continue to assume that the solar panels can operate only for 4,411 hours a year at maximum. In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of at least Hint: It may be easier to think of the present value of operating the solar panels for 1 hour per year first. Approximately how many hours per year will the solar panels need to operate to enable this project to break even? 6,371.11 4,900.85 2,450.43 5,881.02 If the solar panels can operate only for 4,411 hours a year at maximum, the project    break even. Continue to assume that the solar panels can operate only for 4,411 hours a year at maximum. In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of at least Hint: It may be easier to think of the present value of operating the solar panels for 1 hour per year first. Approximately how many hours per year will the solar panels need to operate to enable this project to break even? 6,371.11 4,900.85 2,450.43 5,881.02 If the solar panels can operate only for 4,411 hours a year at maximum, the project    break even. Continue to assume that the solar panels can operate only for 4,411 hours a year at maximum. In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of at least Hint: It may be easier to think of the present value of operating the solar panels for 1 hour per year first. Approximately how many hours per year will the solar panels need to operate to enable this project to break even? 6,371.11 4,900.85 2,450.43 5,881.02 If the solar panels can operate only for 4,411 hours a year at maximum, the project    break even. Continue to assume that the solar panels can operate only for 4,411 hours a year at maximum. In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of at least 6,371.11 4,900.85 2,450.43 5,881.02 6,371.11 4,900.85 2,450.43 5,881.02 6,371.11 4,900.85 2,450.43 5,881.02 6,371.11 6,371.11 6,371.11 4,900.85 4,900.85 4,900.85 2,450.43 2,450.43 2,450.43 5,881.02 5,881.02 5,881.02 If the solar panels can operate only for 4,411 hours a year at maximum, the project    break even. If the solar panels can operate only for 4,411 hours a year at maximum, the project    break even. If the solar panels can operate only for 4,411 hours a year at maximum, the project    break even. If the solar panels can operate only for 4,411 hours a year at maximum, the project    break even. Continue to assume that the solar panels can operate only for 4,411 hours a year at maximum. In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of at least Continue to assume that the solar panels can operate only for 4,411 hours a year at maximum. Continue to assume that the solar panels can operate only for 4,411 hours a year at maximum. In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of at least In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of at least In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of at least

Explanation / Answer

Solar panels capacity = 400 KW

Electricity purchase price per KWh = $ 0.20

Revenue per hour of operation per year = 400KW * $ 0.20 = $ 80 per year

Compound interest factor for a discount rate of 30% = 3.3158 (taken from compound interest factor table or computed using formula 1/(1+r)^t , where r = 30%, and t = 1 to 30)

Present value of operating the solar panels for 1 hour per year = 80*3.3158 = $ 265.26

Hours per year the solar panels need to operate to enable this project to break even = Fixed cost / PV of operating 1 hour per year = 1,300,000 / 265.64 = 4,900.85 hours

Therefore, If the solar panels can operate only for 4,411 hours a year at maximum, the project Will NOT break even. (because this is less than break even number of hours (4900.85) required to operate per year)

Continue to assume that the solar panels can operate only for 4,411 hours a year at maximum, PV of cash inflows = 265.26*4411 = $ 1,170,062

Therefore, university would need a grant of at least = 1,300,000 - 1,170,062 = $ 129,938

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

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