What is the internal rate of return

Assignment Help Other Subject

Reference no: EM132148844

Question: A renewable energy system is being evaluated by an office building, its initial cost is $25,850. This system is estimated to provide energy savings equivalent to a cut-off of $5,250 from the annual electricity bill. Annual operation and maintenance costs are estimated to be just $830. This system has a useful life of 10 years with no salvage value.

1. What is the Internal Rate of Return (IRR) of this renewable energy system ?

If you know that the building owner can sell electricity to the grid during weekends and holidays scoring a reinvestment rate of 10%.

2. What is the Adjusted Internal Rate of Return (AIRR) for this renewable energy system ?

3. If you know that the building owner uses a MARR equals to 12%, would you recommend he uses that energy system?

Reference no: EM132148844

Questions Cloud

What is the user cost of capital : a. What is the user cost of capital? b. What is the value of the firm's desired capital stock?

Define relationship between production technology and cost : What is the relationship (if any) between production technology (i.e. productivity) and cost ? In your analysis define the various cost structures.

Ideas of modernization and progress : Why are ideas of "modernization" (cohn, 107) and "progress" so important to the post-World War II

Understand how to summarize a companies business activities : Having trouble trying to understand how to summarize a companies business activities... Please complete the following in order to help me better understand:

What is the internal rate of return : A renewable energy system is being evaluated by an office building, its initial cost is $25,850. This system is estimated to provide energy savings equivalent.

Discussion on what the guiding stars : discussion on what the “guiding stars” are and how these work together with values/vision/mission.

Surplus-maximizing amount of wilderness land : AND if the cost of preservation is shared equally among all four families, what is the surplus-maximizing amount of wilderness land to be preserved?

Incorporate socially responsible marketing in their messages : Find three examples, of advertisement that incorporate socially responsible marketing in their messages.

Output to the sociallly-optimal quantity : What is the SMALLEST payment the paper firm would accept as compensation for altering its output to the sociallly-optimal quantity?

User Account

All Pages