Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

question is below in image Photovoltaic systems With 50 packaged small scale photovoltaic systems already leased to industrial operators. Toni Salmern would like to offer

image text in transcribed

question is below in image

image text in transcribedimage text in transcribed
Photovoltaic systems With 50 packaged small scale photovoltaic systems already leased to industrial operators. Toni Salmern would like to offer her US based solar leasing company for sale at a price of $1 .000.000 before the beginning of next year's operations. Tomi and her partners have built up the business over the past five years using their savings and good old-fashioned sweat equity. They hold key patents on battery, control, and manufacturing technology that they intend to retain. Toni wants us to develop a three-year economic analysis to evaluate buyers' tenders for the company. Some particulars The company's property taxes are $35,000 per year and are expected to grow at an annual rate of 4%. Toni currently spends $4.800 per year per system to maintain and administer the fleet. Administrative and maintenance costs are expected to increase by 7% per year. Currently, Toni leases her systems for $1,000 per month each. She leases 60% of the systems each month. Toni believes demand for her systems is highly elastic. Her market surveys and pricing experiments indicate that the percentage of the fleet leased each month increases by 7% for each $100 per system per month reduction in the lease price. For example, at $600 per month, she expects that 88% of her systems would be rented. She also believes lease prices can be increased 9% in years two and three without affecting the fleet lease percentage established during the first year. At the end of three years, Toni assumes for the purpose of the assessment that the buyer will resell the business for three times the revenue earned in year three. Until the end of the third year. the fleet size will remain constant so that no systems will be bought or sold. Requirements 1. We construct an influence diagram for our analysis, labeling the decision variables. the key parameters. and the performance measures. 2. We then use the influence diagram diagram to construct an Excel spreadsheet. We label the cells containing the key problem parameters and constants. Our design and implementation uses named ranges. no hard coding of constants anywhere. 3. We use a data table to determine the system lease price that achieves the highest overall investment performance. 4. We then construct a 2-way data table to analyze the sensitivity of overall investment profitibility to one of following parameters: purchase price, annual maintenance cost/system, annual property taxes, and/or lease price growth rate

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Karen Braun, Linda S Bamber

2nd Edition

136091164, 978-0136091165

More Books

Students also viewed these Accounting questions

Question

2. Develop a good and lasting relationship

Answered: 1 week ago

Question

1. Avoid conflicts in the relationship

Answered: 1 week ago