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
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Please try to solve it in 30 minute

Transcribed Image Text:You and a friend want to start a residential solar company here in Golden, Colorado. Below are
the estimated sales numbers, revenue per installation, panel costs, operating costs, and up-
front capital cost to get your business up and running. Using a 10% minimum discount rate,
calculate your NPV, ROR (show interpolation), and PVR. Next, calculate the breakeven revenue
per system required to breakeven with other opportunities at 10%.
Solar Pannel Company Economics
3
4
5
Year
1
Gross Revenue Per Installation
65,000
20
25
30
Installations per year
10
15
$4
(50,000)
$
(5,000)
2$
(400,000)
Pannel Cost Per Install
Operating cost per Install
Capital Investment
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