Your business is considering installing solar panels to reduce the electricity account and to be more...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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. 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.
Expert Answer:
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
Related Book For
Intermediate Accounting
ISBN: 978-0071339476
Volume 1, 6th Edition
Authors: Beechy Thomas, Conrod Joan, Farrell Elizabeth, McLeod Dick I
Posted Date:
Students also viewed these finance questions
-
Heidi runs a small bicycle store. The business is registered for GST. All sales are taxable supplies. As Heidi's tax agent, it is your responsibility to calculate the GST for each product sold. In...
-
b) Does a K value less than 1 refract a radio beam towards the earth or away from the earth? . Does a K value less than 1 allow greater spacing between towers or require smaller spacing? Does...
-
Solar Power Inc, (SPI) is a public company manufacturing and distributing solar panels. SPI has been in existence for 10 year the last three have been as a public company. To date, the company has...
-
Given a risk-adjusted discount rate of 14%, calculate the discounted payback period for the following cash flow of a project. If the maximum target discounted payback period is 3 years, comment on...
-
Treat the problem of wave propagation along a string loaded with particles of two different masses, m and m, which alternate in placement; that is, Show that the w k curve has two branches in this...
-
A carbon compound P has the percentage composition 85.7% carbon and 14.3% hydrogen. Its relative molecular mass was found to be 56. a. i. Calculate its empirical formula. ii. Calculate its molecular...
-
For each of the following situations, calculate the \(z\)-statistic \((z)\), make a decision about the null hypothesis (reject, do not reject), and indicate the level of significance \((p>.05, p
-
How is it helpful for a private not-for-profit organization to account for current funds as restricted or unrestricted?
-
In what ways do Lean Management practices facilitate the cultivation of a culture of continuous improvement and empower employees to actively engage in problem-solving initiatives aimed at enhancing...
-
For the differential manometer shown in Fig. 3.27, calculate the pressure difference between points A and B. The specific gravity of the oil is 0.85. 10 in 32 in Oil Water 9 in el
-
Consider the basis S = {v1, v2} for R2, where v = (1, 1) and v2 = (1, 0), and let T:R2 - R2 be the linear operator for which T(v1) = (1, 6) and T(v2) = (- 12, 1) Find a formula for T(x1, x2), and...
-
A Kenworth truck is purchased on credit by Samuel Keith for $522 500 ($475 000 + $47 500 GST) on 1 May 2021. It is to be used for interstate long-distance haulage and is to be depreciated over 500...
-
A patent is an exclusive right granted to the creator of an invention. Under U.S. law, a patent owner possesses that right for twenty years. The owner can allow another party to make and market a...
-
Sam contracts with Hugos Sports Equipment to buy a jet ski and to pay for it in installments. Sam is a minor, and so he can choose to avoid his contractual obligations. The contract between Sam and...
-
A personal name can be trademarked if it has acquired a secondary meaning. (True/False)
-
For each of the business transactions listed below, you are to enter in the Workbook: a the account name, with debit account first b if the account entry is a debit or credit c the chart of account...
-
Write a program to move data from one string to another using string operation. Hint:rep movsb
-
Quality Chicken grows and processes chickens. Each chicken is disassembled into five main parts. Information pertaining to production in July 2012 is: Joint cost of production in July 2012 was $50. A...
-
What is the difference between basic EPS and fully diluted EPS?
-
For each of the situations below, explain whether the company can use its preferred basis of accounting: 1. A Great Lakes shipping company based in Thunder Bay, Ontario, wishes to use U. S. dollars...
-
Return to the facts of A11- 2. Assume now that the investor is a private company that complies with ASPE. Required: How should the investor classify each of the investments? What accounting method...
-
Cress Trust owns houses in Marion County, for whom Rainbow Realty Group, Inc., sells, rents, and manages. The same person serves as Rainbows president and Cresss corporate trustee. Cress offers four...
-
Genevieve and William Timmons began their tenancy of a ground-floor apartment at Cobblestone Square in September 2011. Kingsley-Johnston, Inc., is a property management company responsible for...
-
Linda Miller rented 35 acres of pastureland in Wabaunsee County, Kansas, from William Burnett for $1,000 per year. Miller and her husband used the land to grow and harvest brome grass for their...
Study smarter with the SolutionInn App