In southern California a photovoltaic (PV) system for a certain home costs $28,000 for parts and installation. This 6.1 kW system requires 350 ft of rooftop space and has an estimated life of 20 years. a. If this PV system saves $200 each month in electricity expenses, what is the simple payback period in months? b. If the market value of the PV system is negligible, what is the system's IRR?

In southern California a photovoltaic (PV) system for a certain home costs $28,000 for parts and installation. This 6.1 kW system requires 350 ft of rooftop space and has an estimated life of 20 years. a. If this PV system saves $200 each month in electricity expenses, what is the simple payback period in months? b. If the market value of the PV system is negligible, what is the system's IRR?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

A particular service can be purchased for $100 per unit. The same service can be provided by equipment that costs $400,000 today and has a salvage value of $250,000 after 10 years. Annual operating expenses will be $500 per year plus $2.00 per unit.a) If the estimates are correct, what will be the internal rate of return on the incremental investment if 400 units/year are produced.b) If the Attractive Minimum Rate of Return is 15% per year, what is the best alternative?
You are evaluating two different systems: System A costs $45,000, has a three year life and costs $5,000 per year to operate. System B costs $65,000, has a five year life and costs $4,000 per year to operate. If the required rate of return is 8%, which system would you prefer? I Next Slide
You are considering buying a piece of industrial equipment to automate a part of your production process. This automation will save labor costsby as much as $42,000 per year over 12 years. Theequipment costs $270,000. Should you purchase theequipment if your interest rate is 10%?
You are evaluating a project for The Farstroke golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Farstroke to be $470 per unit and sales volume to be 1,000 units in year 1; 900 units in year 2; and 1,325 units in year 3. The project has a 3-year life. Variable costs amount to $260 per unit and fixed costs are $100,000 per year. The project requires an initial Investment of $186,000 in assets, which will be depreciated straight-line to zero over the three-year project life. The actual market value of these assets at the end of year 3 is expected to be $42,000. NWC requirements at the beginning of each year will be approximately 25 percent of the projected sales during the coming year. The tax rate is 21 percent and the required return on the project is 11 percent. What is the operating cash flow for the project in year 2? (Enter your answer as a whole number.) Operating cash flow H SETEL
GiGi Industries must replace its magnesium purification system. Quick & Dirty Systems sells a relatively cheap purification system for $10 million. The system will last 6 years. Do-It-Right sells a sturdier but more expensive system for $12 million; it will last for 8 years. The cheaper system will require $1.1 million in operating costs per year which is 10% higher than the more expensive system. Both will be depreciated straight-line to a final value of zero over their useful lives; neither will have any salvage value at the end of its life. The firm’s tax rate is 30 percent and the discount rate is 11 percent. Which system should GiGi install?
NEED ASAP !!!! WITH EXPLANATION Santos Company needs a new cutting machine. The company is considering two machines: machine X and machine Y. Machine A costs$18,000, has a useful life of ten years, and will reduce operating costs by $7,000 per year. Machine B costs only $12,500, will also reduceoperating costs by $3,500 per year, but has a useful life of only five years.The payback period formula is = Investment required / Annual Net Cash Inflow Which machine should be purchased according to the payback method? a)Machine Xb) none of the abovec) Machine Yd) Both have the same payback period
A firm is considering purchasing computers that will reduce annual costs by P40,000. The Computers costs P300,000 and has a salvage value of P50,000 and a life of 7 years. The annual maintenance cost is P6,000, while not in use by the firm, the computers can be rented to others to generate an income of P10,000 per year. money can be invested for an 8% return, using the ANNUAL COST METHOD, how much is the savings or excess cost the firm has in buying the computers?
A computer call center is going to replace all of its incandescent lamps with more energy-efficient fluorescent lighting fixtures. The total energy saving are estimated to be $2,033 per year, and the cost of purchasing and installing the fluorescent fixtures is $5,400. The study period is five years, and terminal market values for the fixtures are negligible. a. What is the IRR of this investment? b. What is the simple payback period of the investment? c. Is there a conflict in the answers Parts (a) and (b)? List your assumptions. d. The simple payback "rate of return" is 1/θ. How close does this metric come to matching your answer in Part(a)?
The Geo-Star Manufacturing Company is considering a new investment in a punch-press machinethat will cost $100,000 and has an annual maintenance cost of $10,000. There is also an additionaloverhauling cost of $20,000 for the equipment onceevery four years. Assuming that this equipment willlast infinitely under these conditions, what is thecapitalized equivalent cost of this investment at aninterest rate of 10%?
Chevrolet Corporation is considering replacing an obsolete machine with a new machine. The new machine would cost P250,000 and would have a ten-year useful life. The new machine would cost P12,000 per year to operate and maintain, but would save P55,000 per year in labor and other costs. The old machine can be sold now for P10,000. The simple rate of return on the new machine is closest to: A. 17.9% B. 7.5% C. 22.0% D. 7.2%
ASAP
A geothermal heat pump can save up to 80%of the annual heating and cooling bills of a certain home in the northeastern U.S. In this region, the yearly cost of conventionally heating and cooling a 2,000 square foot house is about $2,800. With a federal tax credit of 30% on the total installation of the system, how much can a homeowner afford to spend for a geothermal heat pump if the interest rate is 8% per year? The expected life of the heat pump is 15 years. The maximum amount a homeowner can afford to spend for a geothermal heat pump is $

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS