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#### Individual Problems 5-4  A university spent \$1

###### Economics

Individual Problems 5-4
A university spent \$1.7 million to install solar panels atop a parking garage. 'These panels will have a capacity of 400 kilowatts (kW) and have a life expectancy of 20 years. Suppose that the discount rate is 30%, that electricity can be purchased at \$0.10 per kilowatt-hour (kWh), and that the marginal cost of electricity production using the solar panels is zero.
Hint: It may be easier to think of the present value of operating the solar panels for 1 hour per year first. Approximately how many hours per year will the solar panels need to operate to enable this project to break even?
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If the solar panels can operate only for 11,536 hours a year at maximum, the project 'V break even. Continue to assume that the solar panels can operate only for 11,536 hours a year at maximum. In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of at least •ir

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