Calculate the net present value of the investment

Assignment Help Managerial Accounting
Reference no: EM133143331

Question - Jannsen Limited is contemplating investing in solar panels to reduce its need to purchase electricity from its local hydro company. The panels are estimated to cost $2,000,000 and will have a 15-year useful life with no salvage value. The electricity cost savings are expected to be about $200,000 per year. Management expects there will be some intangible benefits arising from purchasing the solar panels such as increased goodwill among its younger customers who are, on average, environmentally conscious. This could lead to increased repeat business with these customers in the future. Jannsen uses a discount rate of 10% when evaluating capital expenditures.

Required -

1. Calculate the net present value of the investment in solar panels.

2. Approximately what would the intangible benefits need to be each year to make it worthwhile to invest in the solar panels?

Reference no: EM133143331

Questions Cloud

How much will Clem have saved in two years : Bank fees, currently $10 per month, are expected to increase by $2 per month, henceforth. How much will Clem have saved in two years
Parents of all cultural backgrounds : What are some ways you can involve parents of all cultural backgrounds in your future classroom?
ASSH101 Introduction to Arts and the Humanities Assignment : ASSH101 Introduction to Arts and the Humanities Assignment Help and Solution, University of Wollongong - Assessment Writing Service
Family deeply affects child development : Family deeply affects child development. Describe how familial relationships and environment affect children's development.
Calculate the net present value of the investment : Jannsen uses a discount rate of 10% when evaluating capital expenditures. Calculate the net present value of the investment
Child development- specific anxiety and depression symptoms : Create an outline in preparation for your teleconference with Alexis' parents. The specific anxiety and depression symptoms Alexis has shown;
Calculate the earnings per share that will be reported : During 2020, the company had a 4-for-1 stock split. Calculate the 2019 earnings per share that will be reported in Spike's 2020 annual report
Intervention effectiveness for possible intervention : Identify 4 criteria the team will use to evaluate intervention effectiveness for each possible intervention.
How much money will he have at the end of year : Rick is planning to invest $1847.2 today at 6 percent interest. How much money will he have at the end of year 3

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Manage budgets and financial plans

Explain the budgeting process and its importance to a business, identifying the components of different budgets, forecast estimates for inclusion in the budgets.

  Prepare a retained earnings statement

Prepare a retained earnings statement for the year and Prepare a stockholders' equity section of given case.

  Prepare a master budget for the three-month period

Prepare a master budget for the three-month period.

  Construct the companys direct labor budget

Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

  Evaluate the predetermined overhead rate

Evaluate the Predetermined Overhead Rate

  Determine the company''s bid

Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing cost plus 30 percent.

  Compute the pool rates for the different activities

Complete the schedule to compute the pool rates for the different activities.

  Prepare Company financial statements

Prepare Company financial statements

  Prepare an analysis of terracycles

This individual assignment is based on the TerraCycle Inc.

  Discuss the ethical issues

Discuss the ethical issues

  Political resources in emerging markets

Calculate the GDP in Income Approach  and Expenditure Approach

  Management accounting - ehsan electronics company

A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd