EMP EMP Energy Economics & Financial Analysis 2

Question 1

Which federal incentive program provides tax credits to businesses that invest in energy-efficient commercial buildings in the US?

Accepted Answer

Section 179D deduction

Answer

Section 179D of the Internal Revenue Code provides a tax deduction for energy-efficient commercial buildings that meet specific efficiency improvements.

Question 2

What is the primary purpose of an energy baseline in financial analysis?

Accepted Answer

To establish a reference point for measuring actual energy savings

Answer

An energy baseline documents historical consumption before efficiency improvements, enabling accurate quantification of savings achieved by new measures.

Question 3

What financial analysis method accounts for varying cash flows over time and the time value of money to evaluate energy projects?

Accepted Answer

Net Present Value (NPV)

Answer

NPV discounts all projected future cash inflows and outflows to present value, providing a more accurate long-term project evaluation than simple payback.

Question 4

A demand charge on a utility bill is typically based on:

Accepted Answer

The highest 15-minute average power demand recorded during the billing period

Answer

Demand charges are assessed based on the highest peak power demand (kW) recorded, often measured as the greatest 15-minute interval average during the billing period.

Question 5

What is the Internal Rate of Return (IRR) in energy project analysis?

Accepted Answer

The discount rate at which the NPV of a project equals zero

Answer

IRR is the discount rate that makes the net present value of all cash flows from an energy project equal zero, representing the project's effective rate of return.

(EMP) Energy Management Professional Practice Test

(EMP) Energy Management Professional Practice Test

EMP EMP Energy Economics & Financial Analysis 2