After investigating the technology, you have recommended that your company invest in piezoelectric generators that cost...
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After investigating the technology, you have recommended that your company invest in piezoelectric generators that cost $80 000.00 each. The generator converts ambient vibrations into usable power. When attached to heavy machinery, any slight rumble causes a flap in the generator to flutter which in turn creates a current that gets fed back into the power grid of your production line. Each generator has been shown to result in net energy savings of $600.00 per month for the next 20 years. (a) Draw a cash-flow diagram which depicts the situation (b) Assume an annual interest rate of 5.0 percent and determine the equivalent annual savings as a result of installing one generator. (c) How many generators would need to be purchased to meet a company goal to reduce electrical costs by $20 000.00 per year? After investigating the technology, you have recommended that your company invest in piezoelectric generators that cost $80 000.00 each. The generator converts ambient vibrations into usable power. When attached to heavy machinery, any slight rumble causes a flap in the generator to flutter which in turn creates a current that gets fed back into the power grid of your production line. Each generator has been shown to result in net energy savings of $600.00 per month for the next 20 years. (a) Draw a cash-flow diagram which depicts the situation (b) Assume an annual interest rate of 5.0 percent and determine the equivalent annual savings as a result of installing one generator. (c) How many generators would need to be purchased to meet a company goal to reduce electrical costs by $20 000.00 per year?
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Answer rating: 100% (QA)
b To find the equivalent annual savings we need to calculate the Present Value PV of the net energy ... View the full answer
Related Book For
Valuation The Art and Science of Corporate Investment Decisions
ISBN: 978-0133479522
3rd edition
Authors: Sheridan Titman, John D. Martin
Posted Date:
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