Calculate Payback Period for Solar and Corn Projects
Company: Capital One
Role: Data Scientist
Category: Analytics & Experimentation
Difficulty: medium
Interview Round: Technical Screen
##### Scenario
Energy One must choose between two renewable projects.
Solar: upfront $12.5 M, VC $0, production 75 % of the year at 150,000 units and 25 % at 50,000 units, price $40/unit.
Corn bio-power: upfront $2.5 M, VC $30/unit, constant output, price $40/unit.
##### Question
a) Calculate the payback period (years until cumulative profit equals initial investment) for the solar project.
b) Do the same for the corn project.
c) Which project should Energy One pursue and why?
##### Hints
Annual profit = revenue − variable cost. Use production profile for solar, constant for corn. Payback = initial investment / annual profit; compare results plus qualitative factors.
Quick Answer: This question evaluates financial analysis and unit-economics skills by requiring computation of simple payback periods for renewable energy projects, testing understanding of payback metrics, variable costs, revenue per unit, and comparative project economics.
