please give a look and answer quickly <333 58 PM/Remaining: 145 min. FULL SCREEN
ID: 2598800 • Letter: P
Question
please give a look and answer quickly <333
58 PM/Remaining: 145 min. FULL SCREEN PRINTER VERSION Question 1 Ranger Corporation has decided to invest in renewable energy sources to meet part of its eneroy needs for production. It is considering solar power versus wind power. After considering cost savings as well as incremental revenues from selling excess electricity into the power grid, it has determined the following. Click here to view Py tabde Solar Wind Present value of annual cash flows $51,380 $128,450 Initial investment $38,200 $104,600 the number eg -45 o 5.25. For calculation Determine the net present value and profitability index of each project. f the net present value is negative, use either a negative sign preceding 125 and profitability index answers to 2 decimal places, e.g. I pu rposes, use 5 decimal places as displayed in the factor table provided.) Solar Wind Net present value Profitability index Which energy source should it choose? The company should choose energy source By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor Question Attempts: 0 of I used SAVE FOR LATER SUBNET ANSWER Earn Maximum Points available only i you answer this question correctly in your firstExplanation / Answer
Net present value = Present value of annual cash flows - Initial investment
Therefore,
Net present value of Solar = $51,380 - $38,200 = $13,080
Net present value of Wind = $128,450 - $104,600 = $23,850
Profitability index = Present value of annual cash flows/Initial investment
Therefore,
Profitability index for Solar = $51,380/$38,200 = 1.35
Profitability index for Wind = $128,450/$104,600 = 1.23
The company should choose Solar energy source becasue it has a higher profitability index.
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