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Suppose Kingston decides to install a solar farm with an investment cost of $100,000. This solar farm has an economic life of 10 years and

Suppose Kingston decides to install a solar farm with an investment cost of $100,000. This solar farm has an economic life of 10 years and requires $2,000 in maintenance costs to efficiently generate electricity over its lifespan. Engineers estimated that this solar farm generates 9,000 kWh of electricity per year over its lifespan.

1) Using a 5 percent discount rate, calculate the levelized cost of electricity ($/kWh) for this solar farm.

2) Alternatively, the city can invest in a wind farm that has the same investment & maintenance costs and lasts for 10 years. However, the wind farm generates 12,000 kWh of electricity per year. Using the same discount rate (5%), calculate the levelized cost of electricity for the wind farm.

3) Which of the investments is a better value for money? Explain briefly.

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