Question

A university spent $2 million to install solar panels atop a parking garage. These panels will have a capacity of 800 kilowatts (kW) and have a life expectancy of 20 years. Suppose that the discount rate is 10%, that electricity can be purchased at $0.30 per kilowatt-hour (kWh), and that the marginal cost of electricity production using the solar panels is zero. Hint: It may be easier to think of the present value of operating the solar panels for 1 hour per year first. Approximately how many hours per year will the solar panels need to operate to enable this project to break even? 1,076.71 1,370.36 391.53 978.83 If the solar panels can operate only for 881 hours a year at maximum, the project break even. Continue to assume that the solar panels can operate only for 881 hours a year at maximum. In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of at least

Answer 1

Answer Page No 0 het N = No. of hours per year required to achieve the breakeven Initial rovestment famillion $3,000,000 uniformm annual cosf =P $ 2,000,000 1- (1+10 %) 20 P X 100% P 2,000,000 +234,919.35 8151356 N = 234919.35 $234,919.35 800 kw x $0.3 per kWh 240 978.83 hours .. Number of hours per year required to achieve the break 978183 hours is Option is correct answer Ib the solar panels can operate only for 881 hours a year at maximum, the project will not achieve break even. Size of the grant - $0.3800 x(978183 – 881) 503479.2 ... The grant of $ 23449.a