need urgent and complt answer Guest Houses Corporation is considering buying a solar panel(s)...

60.1K

Verified Solution

Question

Accounting

imageneed urgent and complt answer

Guest Houses Corporation is considering buying a solar panel(s) for electricity saving in two of their house's blocks, one based in Johannesburg and the other in Cape Town. They contracted you to advise them whether to buy it or not. With fluctuating weather pattens, it is estimated that the power output can range from 25kWh to 46kWh per day. They estimated that they can save up to 9600kWh per year using solar system per house blocks. The solar panel company have assured them a guarantee of 10 years in continuous running. They also claim that their footprint is nationally, and they sell their products at similar prices. You collected the following data for your assessment: - Project life =10 years - Cost of capital =10% - Estimated electricity output =38kWh per day - Electricity output efficiency =56% - Electricity costs in Cape Town at year 0 is R2.84 per kWh and expected to grow at 10 \% for the project life. - Electricity costs in Johannesburg at year 0 is R2.76 per kWh and expected to grow at 10% for the project life. - Number of days per year =365 days - Cost of solar system = R245 000 - Routine maintenance expenses = R7 400 per year. Assume constant amount for the first 5 years and then 3% for the remainder of the remaining year. - Ignore taxes and depreciations. Required: 5.1. What is the net present value of the investment of each house? 5.2. What is the payback period of each house? (2) 5.3. What is the discount payback period of each house? (2) 5.4. Should the project(s) be undertaken? Advise. (3) 5.5. If NPV

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students