rane Corporation has decided to invest in renewable energy sources to meet part of its energy needs for production. It is considering solar power versus wind power. After considering cost savings as well as incremental revenues from selling excess electricity into the power grid, it has determined the following. Solar Wind Present value of annual cash flows $56,090 $130,820 Initial investment $39,500 $105,500 Determine the net present value and profitability index of each project. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to 0 decimal places, e.g. 125 and profitability index answers to 2 dec
rane Corporation has decided to invest in renewable energy sources to meet part of its energy needs for production. It is considering solar power versus wind power. After considering cost savings as well as incremental revenues from selling excess electricity into the power grid, it has determined the following. Solar Wind Present value of annual cash flows $56,090 $130,820 Initial investment $39,500 $105,500 Determine the net present value and profitability index of each project. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to 0 decimal places, e.g. 125 and profitability index answers to 2 dec
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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Question
Crane Corporation has decided to invest in renewable energy sources to meet part of its energy needs for production. It is considering solar power versus wind power. After considering cost savings as well as incremental revenues from selling excess electricity into the power grid, it has determined the following.
Determine thenet present value and profitability index of each project. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to 0 decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.25.)
Which energy source should it choose?
|
Solar
|
Wind
|
|||
|---|---|---|---|---|
|
|
$56,090
|
$130,820
|
||
|
Initial investment
|
$39,500
|
$105,500
|
Determine the
|
Solar
|
Wind
|
|||
|---|---|---|---|---|
|
Net present value
|
$enter a dollar amount rounded to 0 decimal places
|
$enter a dollar amount rounded to 0 decimal places
|
||
|
Profitability index
|
enter the number rounded to 2 decimal places
|
enter the number rounded to 2 decimal places
|
Which energy source should it choose?
| The company should choose select an energy energy source. |
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