Initial Cost (includes installation): $6,000

Useful Life: 6 years

Residual value: $200

Annual rent for space: $1,200

Annual repairs and maintenance: $500

Annual revenue: $4,100. This rate will increase 2.5% per year

Annual electricity cost: $1,200. This rate will increase 1% per year

A $1,000 overhaul/upgrade is expected at the at the end of year 3. This cost is depreciated over the remaining 3 years.

Charging companies have a pretax cost of capital of 10% due to their high risk.

After 6 years the charging equipment can be sold for its residual value.

The tax rate is currently 35% and straight-line depreciation can be used for tax purposes.

1. Calculate the NPV/payback and annualized ROI* of an average EV charging station under the current conditions. What is the PV of the income taxes/payments collected/paid by the government for the 100,000 planned charging stations? The government's cost of capital is 3%...governments don't pay taxes. Assume that the charging companies have other income, so they are eligible for tax credits (refunds/reductions). For example, at the 40% tax rate, an annual loss of $10,000 will generate an offsetting $4,000 cash inflow due to the reduction of taxes (net cash flow -$6,000)

*Divide the total cash flows by the initial $6,000 investment and convert to annualized rate