Feasibility of Solar Panel Project for La Trobe University

BUSINESS FINANCE
LA TROBE SOLAR POWER
NET ZERO PROJECT

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
EXECUTIVE SUMMARY.............................................................................................................1
Cash flows associated with the solar energy generation project using the capital budgeting
technique......................................................................................................................................1
Quantitative risk assessment of project that is based over sensitivity analysis of project...........3
Recommendation over the feasibility of project based on risk assessment.................................4
Concise business case proposal of the project to strategic and financial objectives...................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................8

EXECUTIVE SUMMARY
La Trobe University has announced the strategy to become the first university of Victoria. It
has planned to install 7000 solar panels in the city of Melbourne for providing renewable sources
of electricity generation. To meet the part of operating requirements of campus. However, solar
panels will not generate sufficient to offset the energy requirements of campus. It will take 2 year
for the project to complete. This will help the university to reduce the energy consumption.
Project involves considerable costs for university to incur. The project has the life of 40 years
and also will involve dismantling cost of $500000 at the end of life.
Cash flows associated with the solar energy generation project using the capital budgeting
technique.
Solar panel project involves massive requirements of funds. Therefore it is essential for the
university to assess the feasibility of the project using the capital budgeting techniques. There are
number of capital budgeting techniques for ensuring the viability and feasibility of the project.
There are several factors associated with the project that are to be considered in the calculations
of the cash inflow associated with the project (Fasihi, Bogdanov and Breyer, 2017). Project of
installing solar panels in the city of Melbourne will be successful for the university.
Cost of initial project is estimated to be $1,22,50,000 inclusive of all the cost of the
installation , transmission and other related costs. Cash inflows are measured by calculating the
electricity generated by the panels as the saving cost. This will reduce the electricity costs of
university. 7000 Panels will be generating electricity and saving will be measured at the rate of
electricity being charged by the AGL at $0.25. Net profits are the cash flows generated during
the year after considering the period maintenance cost and yearly depreciation cost. Capital
budgeting techniques are applied for measuring the profitability and the time within which its
initial costs will be recovered. Cash flows are calculated after considering the inflation rate and
all the yearly expenditures.
Net Present Value
This is the techniques that is used for measuring the net present value of the project. This
approach measures whether the project will be profitable or not. It is the net present value of the
projected future cash flows. If the NPV is positive projects is considered profitable else not.
Project of Solar panel has life of 40 years.
1