E12-23A (similar to) Griffin Industries is evaluating whether to invest in solar panels to provide some of the electrical needs of its main office building in Boulder, Colorado. The solar panel project would cost $700,000 and would provide cost savings in its utility bills of $45,000 per year. It is anticipated that the solar panels would have a life of 15 years and would have no residual value. Read the requirements (Click the icon to view the present value factor table.) (Click the icon to view the present value annuity factor table.) (Click the icon to view the future value factor table.) (Click the icon to view the future value annuity factor table.) Requirement 1. Calculate the payback period in years of the solar panel project. Requirements Determine the formula, then calculate the payback period. (Round your answer to two decimal places.) Payback period 1. Calculate the payback period in years of the solar panel project. 2. If the company uses a discount rate of 10%, what is the net present value of this project? 3. If the company has a rule that no projects will be undertaken that have a payback period 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? Print Done Reference Periods 1 2 3 4 5 Present Value of $1 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% 0.990 0.980 0.971 0.962 0.9520.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 0.980 0.961 0.943 0.925 0.9070.890 0.8570.826 0.797 0.769 0.743 0.7180.694 0.971 0.942 0.915 0.8890.864 0.840 0.794 0.751 0.712 0.675 0.641 0.609 0.579 0.961 0.924 0.888 0.855 0.823 0.792 0.735 0.683 0.636 0.592 0.552 0.516 0.482 0.951 0.906 0.863 0.822 0.784 0.747 0.681 0.621 0.567 0.519 0.476 0.437 0.402 0.942 0.888 0.837 0.790 0.746 0.705 0.630 0.564 0.507 0.456 0.410 0.370 0.335 0.933 0.871 0.813 0.760 0.711 0.665 0.583 0.513 0.452 0.400 0.354 0.314 0.279 0.923 0.853 0.789 0.731 0.677 0.627 0.540 0.467 0.4040.3510.305 0.266 0.233 0.914 0.837 0.766 0.703 0.6450.592 0.500 0.424 0.361 0.308 0.263 0.225 0.194 0.905 0.820 0.744 0.676 0.614 0.558 0.463 0.386 0.322 0.270 0.227 0.191 0.162 0.896 0.8040.722 0.650 0.585 0.527 0.429 0.350 0.287 0.237 0.1950.162 0.135 0.887 0.788 0.701 0.625 0.557 0.497 0.397 0.319 0.257 0.208 0.168 0.137 0.112 0.879 0.773 0.681 0.601 0.530 0.469 0.368 0.290 0.229 0.182 0.145 0.116 0.093 0.870 0.758 0.661 0.577 0.505 0.442 0.340 0.263 0.205 0.160 0.125 0.099 0.078 0.861 0.743 0.642 0.555 0.481 0.417 0.315 0.239 0.183 0.140 0.108 0.084 0.065 0.820 0.673 0.554 0.456 0.377 0.312 0.215 0.149 0.104 0.073 0.051 0.037 0.026 0.780 0.610 0.478 0.375 0.295 0.233 0.146 0.092 0.059 0.038 0.024 0.016 0.010 0.742 0.552 0.412 0.308 0.231 0.174 0.099 0.057 0.033 0.0200.012 0.007 0.004 0.672 0.453 0.307 0.208 0.142 0.097 0.046 0.022 0.011 0.005 0.003 0.001 0.001 Print Done - Reference Present Value of Annuity of $1 Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% 1 0.990 0.980 0.971 0.962 0.9520.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 2 1.970 1.942 1.9131.886 1.859 1.833 1.783 1.736 1.690 1647 1.605 1.566 1.528 3 2.9412.884 2.829 2.775 2.723 2.673 2577 2.487 2.4022.322 2.246 2.174 2.106 4 3.902 3.808 3.717 3.630 3.546 3.465 3312 3.170 3.037 2.914 2.798 2.690 2.589 5 4.853 4.713 4.580 4.452 4.329 4.212 3.9933.791 3.605 3.433 3.274 3.127 2.991 6 5.795 5.601 5.417 5.2425.076 4.917 4.623 4.355 4.111 3.889 3.685 3.498 3.326 6.728 6.472 6.230 6.0025.786 5.5825.206 4.868 4.564 4.288 4.039 3.812 3.605 8 7.652 7.325 7.020 6.733 6.463 6.210 5.747 5.335 4.968 4.639 4.344 4.0783.837 9 8.566 8.162 7.786 7.435 7.108 6.802 6247 5.759 5.328 4.9464.607 4303 4.031 9.471 8.983 | 8.530 8.111 7.722 7.360 6.710 6.145 5.6505.216 4.833 4.494 4.192 11 10.368 9.7879.253 8.760 8.306 7.887 7.139 6.495 5.938 5.453 5.029 4.656 4.327 12 11.255 10.575 9.954 9.385 8.863 8.384 7.536 6.814 6.194 5.660 5.1974.793 4.439 13 12.134 11.348 10.635 9.9869.394 8.853 7.904 7.103 6.424 5.842 5.342 4.910 4.533 14 13.004 12.106 11.296 10.563 9.899 9.295 8.244 7.367 | 6.628 6.0025.468 5.008 4.611 15 13.865 12.849 11.938 11.11810.380 9.712 8.559 7.606 6.811 6.142 5.575 5.092 4.675 20 18.046 | 16.351 14.877 13.590 12.462 11.470 9.818 8.514 7.4696.623 5.9295.353 4.870 25 22.023 1952317.413 15.622 14.094 12.783 10.675 9.077 7.8436.873 6.097 5.467 4.948 30 25.808 22.396 | 19.600 | 17.292 | 15.372 13.765 11.258 9.427 8.055 7.003 6.177 5.517 4.979 40 32.835 27355 23.115 19.793 17.159 15.046 11.925 9.7798.244 7.1056.233 5.548 4.997 Print Done Reference - X Periods 2 3 4 5 6 7 8 9 10 1% 1.010 1.020 1.030 1.041 1.051 1.062 1.072 1.083 1.094 1.105 1.116 1.127 1.138 1.149 1.161 1.220 1.282 1.348 1.489 2% 1.020 1.040 1.061 1.082 1.104 1.126 1.149 1.172 1.195 1.219 1.243 1.268 1.294 1.319 1.346 1.486 1.641 1.811 2.208 3% 1.030 1.061 1.093 1.126 1.159 1.194 1.230 1.267 1.305 1.344 1.384 1.426 1.469 1.513 1.558 1.806 2.094 2.427 3 262 4% 1.040 1.082 1.125 1.170 1.217 1.265 1.316 1.369 1.423 1.480 1.539 1.601 1.665 1.732 1.801 2.191 2.666 3243 4.801 5% 1.050 1.103 1.158 1.216 1.276 1.340 1.407 1.477 1.551 1.629 1.710 1.796 1.886 1.980 2.079 2.653 3.386 4322 Future Value of $1 6% 8% 1.060 1.080 1.124 1.166 1.191 1.260 1.262 1.360 1.338 1.469 1.419 1.587 1.504 1.714 1.594 1.851 1.689 1.999 1.791 2.159 1.898 2 332 2012 2.518 2.133 2.720 2.937 2.397 3.172 3.207 4.661 4292 6.848 5.743 10.063 10.286 21.725 10% 1.100 1.210 1.331 1.464 1.611 1.772 1.949 2.144 2.358 2.594 2.853 3.138 3.452 3.797 4177 6.727 10.835 17.449 45.259 12% 1.120 1254 1.405 1.574 1.762 1.974 2.211 2.476 2.773 3.106 3.479 3.896 4363 4887 5.474 9.646 17.000 29.960 93.051 14% 1.140 1.300 1.482 1.689 1.925 2 195 2.502 2.853 3.252 3.707 4.226 4.818 5.492 6.261 7.138 13.743 26.462 50.950 188.884 16% 1.160 1.346 1.561 1.811 2.100 2436 2.826 3278 3.803 4411 5.117 5.936 6.886 7.988 9.266 19.461 40.874 85.850 378 721 18% 20% 1.180 1.200 1.392 1.440 1.643 1.728 1.939 2.074 2.288 2488 2.700 2.986 3.185 3.583 3.759 4.300 4.435 5.160 5234 6.192 6.176 7.430 7.288 8.916 8.599 10.699 10.147 12.839 11.974 15.407 27 393 38.338 62.669 95 396 143.371 237.376 750 378 1,469.772 11 12 13 14 15 20 2.261 7.040 Print Done i Reference 1% 4% 8% Periods 1 2 3 4 5 1.000 2010 3.030 4.060 5.101 6.152 7.214 8.286 9.369 10.462 11.567 12.683 13.809 14.947 16.097 22.019 28 243 34.785 48.886 2% 1.000 2.020 3.060 4122 5204 6.308 7.434 8.583 9.755 10.950 12 169 13.412 14.680 15.974 17.293 24.297 32.030 40.568 60.402 3% 1.000 2.030 3.091 4184 5.309 6.468 7.662 8.892 10.159 11.464 12.808 14192 15.618 17.086 18.599 26.870 36.459 47575 75.401 1.000 2040 3.122 4246 5.416 6.633 7.898 9.214 10.583 12.006 13.486 15.026 16.627 18.292 20.024 29.778 41.646 56.085 95.026 Future Value of Annuity of $1 5% 6% 10% 1.000 1.000 1.000 1.000 2.050 2.060 2.080 2.100 3.153 3.184 3.246 3.310 4.310 4375 4.506 4.641 5.526 5.637 5.867 6.105 6.802 6.975 7.336 7.716 8.142 8.394 8.923 9.487 9.549 9.897 10.637 11.436 11.027 11.491 12.488 13.579 12578 13.181 14.487 15.937 14.207 14.972 16.645 18.531 15.917 16.870 18.977 21.384 17.713 18.882 21.495 24.523 19.599 21.015 24.215 27.975 21.579 23.276 27.152 31.772 33.066 36.786 45.762 57 275 47.727 54.865 73.106 98.347 66.439 79.058 113.283 164.494 120.800 154.762 259.057 442.593 12% 14% 16% 18% 20% 1.000 1.000 1.000 1.000 1.000 2.120 2.140 2.160 2.180 2.200 3.374 3.440 3.506 3.572 3.640 4.779 4.921 5.066 5215 5.368 6.353 6.610 6.877 7.154 7.442 8. 115 8.536 8.977 9.442 9.930 10.089 10.730 11.414 12.142 12.916 12.300 13.233 14.240 15.327 16.499 14.776 16.085 17.519 19.086 20.799 17549 19.337 21.321 23.521 25.959 20.655 23.045 25.733 28.755 32.150 24.133 27.271 30.850 34931 39.581 28.029 32.089 36.786 42.219 48.497 32.393 37.581 43.672 50.818 59.196 37.280 43.842 51.660 60.965 72.035 72.052 91.025 115.380 146.628 186.688 133.334 181.871 249 214 342 603 471.981 241.333 356.787 530312 790.948 1,181.882 767.091 1,342 0252,360.757 4,163 213 7,343.858 11 12 13 14 15 20 30 40 Print Done