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 Solar $53,293 $38,900 Wind $135,708 $105,200
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 Solar $53,293 $38,900 Wind $135,708 $105,200
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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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 0 decimal places, e.g. 125 and profitability index answe
to 2 decimal places, e.g. 15.25)
Profitability index
Solar
$53,293
$38,900
Which energy source should it choose?
The company should choose
Solar
Wind
$135,708
$105,200
energy source.
Wind
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