Your business is considering installing solar panels to reduce the electricity account and to be more environmentally conscious. You...

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Your business is considering installing solar panels to reduce the electricity account and to be more environmentally conscious. You have determined a system that generates 30KW per hour is appropriate however, you are not sure whether to go ahead. You have obtained a number of quotes which you have narrowed down to Company A or Company B. Each solar company has provided you with the following 20 year financial summary data: Method Accounting Rate of Return Payback Period Net Present Value Initial outlay Panel warranty Company A 1.5% 15-16 years $12,545 positive $30,000 20 years Company B 1% 11-12 years $4,500 $18,000 10 years Required (approximately 700 words): a) Explain each method listed above. b) Determine and list the decision rule that applies for each method (you need to decide a reasonable number) and include one advantage and one disadvantage of each method, but do not repeat advantages or disadvantages. c) Review the results individually, compare them with your estimated decision rule, and determine whether you can individually accept the proposed project for each method. d) Explain the relationship between risk and return. Using the data above briefly explain the risks and return.

Answer rating: 100% (QA)

Analysis of Solar Panel Installation Investment Options a Explanation of Each Method 1 Accounting Rate of Return ARR ARR calculates the average annual accounting profit divided by the initial investme View the full answer