Pulaski Grow is building a geothermal battery to both heat and cool its greenhouses. The initial capital investment is $526,000, and the geothermal battery will save $60,000 per year in energy costs. The salvage value is negligible. The simple payback period is 9 years. The MARR is 7% per year and the life of the geothermal battery is 21 years, what is the IRR for this project? Choose the closest answer below. A. 9.8% per year. B. 10.1% per year. C. 7.4% per year. D. 11.6% per year.
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The net cash flow for each year is the savings in energy costs minus the initial capital investment. In this case, the savings in energy costs is $60,000 per year and the initial capital investment is $526,000. Year 1: $60,000 - $526,000 = -$466,000 Year 2: Show more…
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