Zandri Industries is evaluating whether to invest in solarpanels to provide some of the electrical needs of its mainoffice building in Buffalo, New York. The solar panel projectwould cost $475,000 and would provide cost savings in itsutility bills of $45,000 per year. It is anticipated that the solarpanels would have a life of 15 years and would have noresidual value.(Click the icon to view the present value factor table.)(Click the icon to view the present value annuity factortable.).(Click the icon to view the future value factor table.)(Click the icon to view the future value annuity factorRead the requirements.table.)Requirement 1. Calculate the payback period in years of the solar panel project.Determine the formula, then calcuste the payback period. (Round your answer to two decimal places.)Initial investmentExpected annual net cash inflowPayback period%3D%24475,000$445,00010.56 yearsRequirement 2. If the company uses a discount rate of 10%, what is the net present value of this project? (Round youranswer to the nearest whole dollar. Use parentheses or a minus sign for a negative net present value.)The net present value of the project is%24 i Requirementsouren- to1. Calculate the payback period in years of the solar panel project.2. If the company uses a discount rate of 10%, what is the net present value of this project?3. If the company has a rule that no projects will be undertaken that have a payback period ofmore than five years, would this investment be accepted? If not, what arguments could theenergy manager make to try to obtain approval for the solar panel project?4. What would you do if you were in charge of approving capital investment proposals?et pPrintDone

"Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

1. Calculate the payback period in years of the solar panel project. 2. If the company uses a discount rate of 10%, what is the net present value of this project? 3. If the company has a rule that no projects will be undertaken that have a payback period of more than five years, would this investment be accepted? If not, what arguments could the energy manager make to try to obtain approval for the solar panel project? 4. What would you do if you were in charge of approving capital investment proposals?

1. Calculate the payback period in years of the solar panel project. 2. If the company uses a discount rate of 10%, what is the net present value of this project? 3. If the company has a rule that no projects will be undertaken that have a payback period of more than five years, would this investment be accepted? If not, what arguments could the energy manager make to try to obtain approval for the solar panel project? 4. What would you do if you were in charge of approving capital investment proposals?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

100%

Zandri Industries is evaluating whether to invest in solar
panels to provide some of the electrical needs of its main
office building in Buffalo, New York. The solar panel project
would cost $475,000 and would provide cost savings in its
utility bills of $45,000 per year. It is anticipated that the solar
panels would have a life of 15 years and would have no
residual value.
(Click the icon to view the present value factor table.)
(Click the icon to view the present value annuity factor
table.).
(Click the icon to view the future value factor table.)
(Click the icon to view the future value annuity factor
Read the requirements.
table.)
Requirement 1. Calculate the payback period in years of the solar panel project.
Determine the formula, then calcuste the payback period. (Round your answer to two decimal places.)
Initial investment
Expected annual net cash inflow
Payback period
%3D
%24
475,000
$4
45,000
10.56 years
Requirement 2. If the company uses a discount rate of 10%, what is the net present value of this project? (Round your
answer to the nearest whole dollar. Use parentheses or a minus sign for a negative net present value.)
The net present value of the project is
%24

i Requirements
our
en
- to
1. Calculate the payback period in years of the solar panel project.
2. If the company uses a discount rate of 10%, what is the net present value of this project?
3. If the company has a rule that no projects will be undertaken that have a payback period of
more than five years, would this investment be accepted? If not, what arguments could the
energy manager make to try to obtain approval for the solar panel project?
4. What would you do if you were in charge of approving capital investment proposals?
et p
Print
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