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Green Futures operates a solar panel power generation facility in Florence, Alabama. The current field generates 10 million kilowatt hours per year, but every year production drops off by 1 million kilowatt hours, as dust and droppings accumulate on the panels. Replacing the panels right now with the newest technology panels will increase output to 15 million kilowatt hours, which will then also drop off by 1 million kilowatt hours per year. A new set of panels costs $1.5 million installed. In two years, an even newer panel will be available, with 18 million kilowatts output for only $1 million installed. Green futures sells electricity for $0.07 per kilowatt hour. When should the panels be upgraded? Do an analysis of the next 15 years. Use a discount rate of 15%.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M91960137

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