Question

You are considering installing solar panels on your roof, which you expect will reduce your utility bill by $2600 in the first year (assume end of year), with the savings growing at a 2.9% annual rate thereafter for the foreseeable future (assume perpetual). If the installation costs $18,000 after all federal and state tax credits and the appropriate discount rate is 8.3%, what is the NPV of this investment? Round to the nearest cent.

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

projects (Autosaved) (Autosaved) (Autosaved) - Microsoft Excel (Product Activation Failed) Data Review View Add-Ins - 2x Σ AutoSum : A A = = = V General File Home Insert Page Layout Formulas % Cut Calibri 11 A Ea Copy Paste Format Painter BI U D- DA Clipboard Font AR474 fx AP AQ AR Wrap Text Merge & Center - $ % , :.: Fill 2 Clear Formatting as Table Styles Styles Sort & Find & Filter Select Editing Alignment Number Cells AS AT AU AV AW AX AY AZ BAD 466 perpetual cash flows are given with growth PV OF ALL CASH FLOW = CASHFLOW/(REQUIRED RATE - GROWTH RATE) NPV = NPV = NPV = PV OF ALL CASHFLOW - INVESTMENT 2600/(0.083-0.029) - 18000 30148.15 467 468 469 470 471 472 473 474 475 476 477 478 479 480 481 482 483 484 H invest, EAA MI-np-ir REPLACEMENT S HPR GMAM EAC MACRS NPV RELEVANT BETA LEVERED I RRnpvbeta RATION PBP ARR erences: SM219 REPLACEMENT BOND OPTION TO WAITSTEIN III BOU 130% 0 Rea 29-11-2019