Austin Utilities is planning to install solar panels to provide some of the electricity for its groundwater desalting plant. The project would be done in two phases. The first phase will cost $4 million in year 1 and $5 million in year 2. This investment will result in energy savings (phase 2) of $540,000 in year 3, $546,000 in year 4, and amounts increasing by $6000 each year through year 10. Let i= 10%
Austin Utilities is planning to install solar panels to provide some of the electricity for its groundwater desalting plant. The project would be done in two phases. The first phase will cost $4 million in year 1 and $5 million in year 2. This investment will result in energy savings (phase 2) of $540,000 in year 3, $546,000 in year 4, and amounts increasing by $6000 each year through year 10. Let i= 10%
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
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. Austin Utilities is planning to install solar panels to provide some of the electricity for its groundwater desalting plant. The project would be done in two phases. The first phase will cost $4 million in year 1 and $5 million in year 2. This investment will result in energy savings (phase 2) of $540,000 in year 3, $546,000 in year 4, and amounts increasing by $6000 each year through year 10. Let i= 10% per year.
(b) Is the cost of the solar project justified by the savings?
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