Managerial Economics (MindTap Course List)
4th Edition
ISBN: 9781305259331
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Question
Chapter 5, Problem 5.4IP
(a)
To determine
The break-even hour per year of the operating of the solar panels.
(b)
To determine
The break-even point.
(c)
To determine
The amount of grant that is required to make the project worthwhile.
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Suppose I have computed the cost of carbon per mile for my car at 0.011 per mile. Assume that the interest rate is 5% and that I drive the car 30,000 miles per year. What is present value of the carbon expense for five years? You will need to use the PV function in Excel or a financial calculator. In Excel the present value of a stream of monetary cash flows is given by -PV(rate, number of payments, payment amount) where rate is the interest rate. We enter the payment in Excel as a positive number. You can also compute the carbon cost per year and then discount those five values back to the present.
Kwame Nkrumah University of Cape Coast, Legon spent GHS1.8 million to install solar panels atop a parking garage. These panels will have a capacity of 500 kw, have a life expectancy of 20 years and suppose the discount rate is 10%.a. If electricity can be purchased for costs of GHS0.10 per kwh, how many hours per year will the solar panels have to operate to make this project break even?b. If efficient systems operate for 2,400 hours per year, would the project break even?c. The university is seeking a grant to cover capital costs. How big of a grant would make this project worthwhile (to the university)?
32. A factory has production capacity of P12,000
units per month with an efficiency of 80%
Fixed monthly operating cost = P600,000
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Determine the monthly profit
Chapter 5 Solutions
Managerial Economics (MindTap Course List)
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