Question

In: Accounting

If a solar panel system has an increasing annual maintenance cost (an arithmetic gradient) of $500...

If a solar panel system has an increasing annual maintenance cost (an arithmetic gradient) of $500 per year over an 8 year period, then what is the present value based on 10% interest?

If a solar panel system has an increasing annual maintenance cost (an arithmetic gradient) of $500 per year over an 8 year period THAT STARTS AT YEAR 4, then what is the present value based on 10% interest? To be clear: the total period is 12 years with an 8 year gradient starting in year 4.

If we add an $800 uniform annual payment to the solar panel system of problem #2 (for all 12 years), what is the new total present value? To be clear: this answer depends on a correct answer to problem #2 (where you moved a gradient), which depends on a correct answer to problem #1 (where you calculated a gradient).

Solutions

Expert Solution

1) Annual Cash flow 500
PVA Factor For (8 year,10%) 5.3349262
Present Value $ 2,667.46
2)
Year Cash Flow PV Factor PV of Cash Flow
1 500 0.9090909 $                454.55
2 500 0.8264463 $                413.22
3 500 0.7513148 $                375.66
4 1000 0.6830135 $                683.01
5 1500 0.6209213 $                931.38
6 2000 0.5644739 $            1,128.95
7 2500 0.5131581 $            1,282.90
8 3000 0.4665074 $            1,399.52
9 3500 0.4240976 $            1,484.34
10 4000 0.3855433 $            1,542.17
11 4500 0.3504939 $            1,577.22
12 4500 0.3186308 $            1,433.84
Present Vlaue $          12,706.76
3)
Year Cash Flow PV Factor PV of Cash Flow
1 1300 0.9090909 $            1,181.82
2 1300 0.8264463 $            1,074.38
3 1300 0.7513148 $                976.71
4 1800 0.6830135 $            1,229.42
5 2300 0.6209213 $            1,428.12
6 2800 0.5644739 $            1,580.53
7 3300 0.5131581 $            1,693.42
8 3800 0.4665074 $            1,772.73
9 4300 0.4240976 $            1,823.62
10 4800 0.3855433 $            1,850.61
11 5300 0.3504939 $            1,857.62
12 5300 0.3186308 $            1,688.74
Present Value $          18,157.72
Let me know, if answer wrong. I can correct it.

Related Solutions

Use tables and cash flow diagram: The equivalent annual worth of an increasing arithmetic gradient is...
Use tables and cash flow diagram: The equivalent annual worth of an increasing arithmetic gradient is $135,300. If the cash flow in year 1 is $35,000 and the gradient amount is $19,000, what is the value of n at an interest rate of 10% per year?
For a solar system located in Colorado, how many flat-panel solar collectors with dimensions of 1...
For a solar system located in Colorado, how many flat-panel solar collectors with dimensions of 1 m x 1.5 m and an efficiency of 58% would be required to heat up 80gallons of water from 65°F to 120°F during the month of January? NUMBER OF PANELS
A certain piece ofequipment has an initial cost of $10,000 with an annual maintenance cost of...
A certain piece ofequipment has an initial cost of $10,000 with an annual maintenance cost of $500 per year with no salvage value at the end of its useful life of 4 years.   There is an alternative equipment that costs $20,000 with no maintenance cost the first year.   However, it has a maintenance cost of $100 the second year and increases $100 per year in subsequent years.  Its salvage value is $5,000 and has a useful life of 12 years.  The MARR...
A solar Photovoltaic (PV) system consists of a PV panel, a charger controller, a battery, and an inverter.
A solar Photovoltaic (PV) system consists of a PV panel, a charger controller, a battery, and an inverter. The manufacturer of the PV system guarantees 20 years of lifetime of the entire PV system with reliability of 0.90 at the end of 20 years. The failure rate of its major components is given in Table 1. To achieve the overall system reliability goal, we can add redundant units for each subsystem (see Figure 2). Note that System A is the...
Benefit Cost Analysis: You are trying to decide if you should place a solar panel on...
Benefit Cost Analysis: You are trying to decide if you should place a solar panel on your apartment. You can buy the solar for 1000 dollars today, and it will reduce your electricity bill by $300/year from today until you graduate four years from now (NOTE: this means it is a 4-year project). If you face an interest rate of 10%, should you buy the solar panel for your apartment? Time Benefits Costs 0 300 1000 1 300 0 2...
Create a value proposition for a low-cost solar panel car with all the basic electricity requirements...
Create a value proposition for a low-cost solar panel car with all the basic electricity requirements in areas of the world not on traditional electric grids. (400-500 words)
Today (year 0) a new 7-megaWatt (MW) solar panel farm is constructed at a cost of...
Today (year 0) a new 7-megaWatt (MW) solar panel farm is constructed at a cost of MYR14 million. 4 years from today, a smaller 6-MW solar farm will be added to the existing farm. The inflation rate on solar panel construction projects averages 8% per year. If the cost-capacity factor is 0.85 for solar panel construction, what is the estimated capital investment for the smaller 6-MW solar farm?
Alternative A has an initial acquisition cost of $10,000 and an annual average operating and maintenance...
Alternative A has an initial acquisition cost of $10,000 and an annual average operating and maintenance cost of $1402 per down time. Alternative B has a higher acquisition cost of $20,000, but has a lower annual average operating and maintenance cost of $500 per down time. With an expected lifetime of 5 years for both alternatives, and an annual interest of 5%, determine the break even number of down times per year. please show all work
Wayne-Martin Electric Inc. (WME) has just developed a solar panel capable of generating 200 percent more electricity than any solar panel currently on the market.
Wayne-Martin Electric Inc. (WME) has just developed a solar panel capable of generating 200 percent more electricity than any solar panel currently on the market. As a result, WME is expected to experience a 15 percent annual growth rate for the next 5 years. By the end of 5 years, other firms will have developed comparable technology, and WME's growth rate will slow to 5 percent per year indefinitely. Stockholders require a return of 12 percent on WME's stock. The...
im creating a Photovoltaic Monitoring System VI that simulates energy received from solar panel, which then...
im creating a Photovoltaic Monitoring System VI that simulates energy received from solar panel, which then charges a battery, and then simulates a load. The energy received from the solar panels needs to be able to change based off irradiance. Labview 2018
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT