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Company A is considering the investment of a solar power system ( Solar Panels, Photovoltaic or PV ) on the roof of an existing factory.
Company A is considering the investment of a solar power system Solar Panels,
Photovoltaic or PV on the roof of an existing factory. Total installation costs including
architectural, engineering, installation, testing, and commissioning are estimated to be
$ Included in the $ are estimated incidental costs of $ to bring the
building up to compliance to be able to accept the PV equipment.
The system size is Kilowatts of rated power production. The site surface will
receive daily average peak sun insolation and generate an average of Kilowatt
Hours of production each year. Once commissioned, the PV system is estimated to generate or
offset grid supplied electricity or costs $ cash inflows every year for the next twenty
five years and no scrap of terminal value is assigned to the project.
The project will qualify for the Investment TaxCredit; however, the incidental costs
of the project will not qualify. Note: for the assignment, disregard the implications of the
incidental costs. Assume the entire # as the initial cash outlay.
If the project is assigned a discount or investor's required rate of return of :
Calculate the PV Project's Payback Period.
Calculate the project's Discounted Payback Period.
Calculate the project's Net Present Value
Calculate the project's Internal Rate of Return
Calculate the projects' Profitability Index
Estimate the greenhouse gas reduction from this project:
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