Ranger 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. Present value of annual cash flows Initial investment Net present value $ 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 O decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.25.) Profitability index Solar $54,071 $38,900 Which energy source should it choose? The company should choose Solar Wind $132,334 $104,200 venergy source. Wind
Ranger 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. Present value of annual cash flows Initial investment Net present value $ 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 O decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.25.) Profitability index Solar $54,071 $38,900 Which energy source should it choose? The company should choose Solar Wind $132,334 $104,200 venergy source. Wind
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Subject :- Accounting
Transcribed Image Text:Ranger 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.
Present value of annual cash flows
Initial investment
Net present value.
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 O decimal places, e.g. 125 and profitability index answers
to 2 decimal places, e.g. 15.25.)
Profitability index
Solar
$54,071
$38,900
Which energy source should it choose?
The company should choose
Solar
Wind
$132,334
$104,200
energy source.
Wind
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