1 John Ltd. is deciding whether to continue receiving electricity from the JPS Co., for the next twenty years, or to inv

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1 John Ltd Is Deciding Whether To Continue Receiving Electricity From The Jps Co For The Next Twenty Years Or To Inv 1 (49.46 KiB) Viewed 41 times

1 John Ltd. is deciding whether to continue receiving electricity from the JPS Co., for the next twenty years, or to invest into a solar energy system. The monthly JPS ‘bill is $75,000 and is expected to rise by 4% annually. If the company were to invest in a solar system, the initial outlay would be $3,000,000 and the JPS monthly bill would be reduced to $6,000 but an increase of 2.5% is expected annually. The battery life of the system is 5 years but with the development in technology, it would be extended to 8 years with a corresponding 3% increase in efficiency. The current price of the battery is $790,000 but the next generation is expected to be $600,000, after the 5 years. The reduction in price is expected to be 1% over the subsequent 15 years. Calculate to advise John Ltd. the savings if any, to be realized over the 20 years of investment in the solar system.