Install panels based solely on financial considerations

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Reference no: EM13847832

CFS is considering applying for a stimulus funding grant that would allow it to install solar panels on each of its four fire houses. The roofs on each of the firehouses are big enough to accommodate 30,000 square feet of panels. Panels cost $8 per square foot. In addition, CFS will have to pay $8,000 per fire house for batteries and other equipment costs and $10,000 per fire house for installation. CFS expects the solar panels on the four buildings to generate a total of $6,000 worth of electricity each month for the next ten years. In addition, the stimulus program will give CFS $500,000 toward the cost of buying and installing the solar-power system. Federal stimulus money will be received at the start of the project. If CFS’s cost of capital is 6%, should CFS install the panels based solely on financial considerations? Support your answer with the appropriate time-value-of-money calculations.

Reference no: EM13847832

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