question archive Benjamin Solar Energy Ltd is considering the development of new technology for the solar farms that they operate
Benjamin Solar Energy Ltd is considering the development of new technology for the solar farms that they operate
Subject:FinancePrice: Bought3
Benjamin Solar Energy Ltd is considering the development of new technology for the solar farms that they operate. A feasibility study has already been conducted at a cost of $10,000, which indicated that the project will require an initial investment of $30,800 and is forecasted to generate the following profits:
Year 1
Year 2
Net revenues
$23,337
$22,152
Depreciation
13,860
16,940
Pretax profit
9,477
5,212
Tax at 35%
3,317
1,824
Net profit
6,160
3,388
No cash flows are forecasted to be received after year two and the equipment will have no salvage value at the end of its useful life. The cost of capital for this project is 10%.
Calculate the payback period for the project (round your answer to two decimal places).
