ENGINEERING ECONOMICS HOMEWORK HELP

Interest rate (i) = 10%

Question #3 With the current push to be more environmentally friendly, your boss has asked you to calculate the economic potential of upgrading your current operation to solar power. The current operation is bringing in $100,000 per year (1-10) in before tax cash flows and would require no additional capital expenditure. The Upgrade to solar cash flows are described below. All cash flows are escalated dollars. Base your economic decision on NPV and a proper Rate of Return analysis. (Hint: Do not do what Gene Woolsey did back in the day!) Upgrade Cash flows Year 0 1 2 3 4 5 6 7 8 9 10 Revenue S $ 150,000 $ 150,000 $ 150,000 $ 150,000 $ 150,000 $ 150,000 $ 150,000 $ 150,000 $ 150,000 $ 150,000 Operating Costs $ (15,000) $ (15,000) $ (15,000) $ (15,000) $ (15,000) $ (15,000) $ (15,000) $ (15,000) $ (15,000) $ (15,000) Capital Costs $ (150,000) BTCF's $ (150,000) $ 135,000 $ 135,000 $ 135,000 $ 135,000 $ 135,000 $ 135,000 $ 135,000 $ 135,000 $ 135,000 $ 135,000