Question: Rural Consolidated Fire Services RCFS is considering applying for a

Rural Consolidated Fire Services (RCFS) is considering applying for a Federal Department of Energy (DOE) grant that would allow it to install solar panels on each of its four firehouses. The roofs on each of the firehouses are big enough to accommodate 30,000 square feet of panels. Panels cost $ 8 per square foot. In addition, RCFS will have to pay $ 8,000 per fire-house for batteries and other equipment costs and $ 10,000 per firehouse for installation. RCFS expects the solar panels on the four buildings to generate a total of $ 6,000 worth of electricity each month for the next 10 years. If RCFS puts panels on all four fire-houses, the DOE will give RCFS $ 500,000 toward the cost of buying and installing the solar-power system. Federal stimulus money will be received at the start of the project. If RCFS’s discount rate is 6 percent, should RCFS install the panels based solely on financial considerations? Support your answer with the appropriate TVM calculations.
A. Solve using a spreadsheet program such as Excel.
B. Solve using a financial calculator (optional).

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  • CreatedDecember 19, 2014
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