Should We Invest in Solar?
Cape Manufacturing · Investment case
Should We Invest in Solar?
Three solar proposals. One investment decision. Use Excel to build the evidence, test the assumptions and advise management.
Case study · Cape Manufacturing · The investment brief
Cape Manufacturing is a fictional Western Cape industrial producer facing material electricity costs. Three suppliers have proposed rooftop solar systems costing R650,000 to R990,000. Management wants to reduce grid purchases; any resilience benefit still needs verification. You have been employed as a trainee accountant to assist with the commercial analysis. The financial director has texted you with the following request:
Watch: Introduction to the learning activity · 1 minute
A brief introduction to the activity, the Cape Manufacturing case study,
and how Excel supports evidence-based business decisions.
What you will learn
On successful completion of this activity, you should be able to:
- Build an auditable Excel model comparing alternative investments.
- Analyse financial results using payback, NPV and sensitivity analysis.
- Evaluate assumptions and supplier claims using professional judgement and scepticism.
- Communicate a concise, evidence-based recommendation to management.
What you will produce
Your workbook will contain a Year-1 comparison, one management chart with a short design rationale, a sensitivity table and a recommendation of 100 words or fewer. You will also request evidence for Supplier C’s environmental claim and briefly reflect on how your judgement developed.
The spreadsheet provides the evidence. The decisions require your judgement.
Get your workbook
Complete the activity in Microsoft Excel using the supplied workbook. Save a working copy with your name before entering formulas.
Student workbook .xlsx · download Case brief PDF · open Quick reference Excel + Sheets · PDF Formula help PDF · diagnostic
Google Sheets compatibility
Upload the workbook to Google Drive, open it in Google Sheets and choose File → Save as Google Sheets. Keep the sheet names and cell addresses unchanged. Equivalent instructions appear where the interface differs; the financial model is the same.
Begin with the business problem
Open Start Here and read the brief. The five tabs keep the work traceable: Start Here provides orientation, Case Data holds inputs, Your Model contains your Year-1 calculations, Test Assumptions supports sensitivity analysis, and Recommendation records your advice.
Follow Understand → Spreadsheet Essentials → Build → Test → Decide → Reflect. Start by interpreting the supplier data before entering formulas. Spreadsheet Essentials provides the few prerequisite moves a beginner needs; later checkpoints help you diagnose errors as you work.
For reviewers: the Reviewer Rationale provides a five-minute route through the Excel tasks, learning design and evidence of achievement.
South African commercial context
Cape Manufacturing is a fictional Western Cape industrial producer. All monetary values are in South African Rand (R). The electricity tariff, escalation rate and other financial parameters are assumptions, not forecasts of South African tariffs or investment conditions. Unless stated otherwise, use the figures exactly as provided and do not introduce VAT, tax, financing or feed-in revenue into the model.
Next: understand the business data before building the model.
Glossary & further reading · optional
- Auditable model
- A model whose inputs, formulas and results can be traced and checked by another person. It does not mean the workbook has undergone a formal audit.
- Professional judgement
- Applying relevant knowledge and weighing evidence, uncertainty and business priorities to reach a reasoned conclusion.
- Professional scepticism
- A questioning approach that critically assesses evidence and notices gaps or inconsistencies. It does not mean automatically distrusting a supplier.
- Simple payback period
- An estimate of how long savings take to recover the initial cost. This course uses installed cost divided by net Year-1 saving, without discounting future savings.
- Net present value (NPV)
- The value today of expected future net cash flows, less the initial investment. It helps compare long-term financial value under the chosen assumptions.
- Sensitivity analysis
- Testing how a model result changes when an assumption changes. Here, you explore whether lower use of System C’s solar output changes the preferred proposal.
Further reading
Accountancy SA — Professional scepticism explained
South African accountancy context for questioning and critically assessing evidence, illustrated through auditing.
Read the resource ↗ACCA — Investment appraisal
Further explanation of discounted cash flows and investment appraisal; the worked example goes beyond this course.
Read the resource ↗