Problem
Sunland Corporation has decided to invest in renewable energy sources to meet part of its energy needs for production. It is considering solar power versus wind power. After considering cost savings as well as incremental revenues from selling excess electricity into the power grid, it has determined the following.
Solar Wind
Present value of annual cash flows $51,590 $131,670
Initial investment $38,500 $104,500
1) Determine the net present value and profitability index of each project.
2) Which energy source should it choose?