A university spent $2 million to install solar panels atop a parking garage. These panels will have
Question:
A university spent $2 million to install solar panels atop a parking garage. These panels will have a capacity of 300 kilowatts (kW) and have a life expectancy of 20 years. Suppose that the discount rate is 10%, that electricity can be purchased at $0.30 per kilowatt-hour (kWh), and that the marginal cost of electricity production using the solar panels is zero.
Hint: It may be easier to think of the present value of operating the solar panels for 1 hour per year first.
Approximately how many hours per yearwill the solar panels need to operate to enable this project to break even?
2,610.22
3,393.29
3,132.26: this is the answer
1,044.09
If the solar panels can operate only for 2,349 hours a year at maximum, the project break even or not?
Continue to assume that the solar panels can operate only for 2,349 hours a year at maximum.
3. In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of at least how much?
Managerial Economics A Problem Solving Approach
ISBN: 978-1133951483
3rd edition
Authors: Luke M. Froeb, Brian T. McCann, Mikhael Shor, Michael R. War