A university spent $2 million to install solar panels atop a parking garage. These panels will have a capacity of 300 kilowatts (kW) and have a life expectancy of 20 years. Suppose that the discount rate is 10%, that electricity can be purchased at $0.20 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. 1. Approximately how many hours per year will the solar panels need to operate to enable this project to break even? Choose the correct answer below 5,089.96 1,566.14 3,915.35 3,132.28 2. If the solar panels can operate only for 3,524 hours a year at maximum, the project (Choose one: would or would not) break even. Continue to assume that the solar panels can operate only for 3,524 hours a year at maximum. 3. In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of at least (choose one) $ 199,905.56 $ 179,915.00 $ 299,858.34 $ 99,952,78

A university spent $2 million to install solar panels atop a parking garage. These panels will have a capacity of 300 kilowatts (kW) and have a life expectancy of 20 years. Suppose that the discount rate is 10%, that electricity can be purchased at $0.20 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. 1. Approximately how many hours per year will the solar panels need to operate to enable this project to break even? Choose the correct answer below 5,089.96 1,566.14 3,915.35 3,132.28 2. If the solar panels can operate only for 3,524 hours a year at maximum, the project (Choose one: would or would not) break even. Continue to assume that the solar panels can operate only for 3,524 hours a year at maximum. 3. In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of at least (choose one) $ 199,905.56 $ 179,915.00 $ 299,858.34 $ 99,952,78

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 3.4CE

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Question

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A university spent $2 million to install solar panels atop a parking garage. These panels will have a capacity of 300
kilowatts (kW) and have a life expectancy of 20 years. Suppose that the discount rate is 10%, that electricity can be
purchased at $0.20 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.
1. Approximately how many hours per year will the solar panels need to operate to enable this project to break even?
Choose the correct answer below
5,089.96
1,566.14
3,915.35
3,132.28
2. If the solar panels can operate only for 3,524 hours a year at maximum, the project (Choose one: would or would not)
break even.
Continue to assume that the solar panels can operate only for 3,524 hours a year at maximum.
3. In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of at least (choose
one)
$ 199,905.56
$ 179,915.00
$ 299,858.34
$ 99,952,78

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