Answered: You are asked to determine the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You are asked to determine the feasibility of a solar farm for $3,000,000. The price per KWH is $0.20 and based on your budget your production cost is $0.12 per KWH. The farm is expected to produce 5,000,000 KWH per year with an expected life of 15 years. The annual operating and maintenance costs of the mine is $100,000,00 per year. What is the annual profit from the solar farm? How many years before the farm is paid off? How many KWH are needed to pay off the investment? What is the breakeven volume?

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