Grant Industries is evaluating whether to invest in solar panels to provide some of the electrical needs

Question:

Grant Industries is evaluating whether to invest in solar panels to provide some of the electrical needs of its main office building in Buffalo, New York. The solar panel project would cost $600,000 and would provide cost savings in its utility bills of $50,000 per year. It is anticipated that the solar panels would have a life of 20 years and would have no residual value.
Requirements
1. Calculate the in years of the solar panel project.
2. If the company uses a of 12%, what is the of this project?
3. If the company has a rule that no projects will be undertaken that have a 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?
Net Present Value
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Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...