Required information The following information applies to the questions displaye

Question

Required information The following information applies to the questions displayed below A company is investing in a solar panel system to reduce its electricity costs. The system requires a cash payment of $115,174.60 today. The system is expected to generate net cash flows of $10,899 per year for the next 35 years. The investment has zero salvage value. The company requires an 8% return on its investments. 1-a. Compute the net present value of this investment. (PV of $1. FV of $1. PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals.) Chart Values are Based on: Cash Flow Select Chart Amount | x | PV Factor! = Present Value Annual cash flow 0.00 Net present value

Explanation / Answer

Calculation of Net Present Value :-

Investment = $115174.60

Annual Cash Flow = $10899

n = 35 years

i = 8%

Net Present Value = - Investment + (Annual Cash Flow*PV Factor)

= - $115174.60 + ($10899 * 11.65456)

= - $115174.60 + $127023.05

= $11848.45

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