In this problem, we consider replacing an existing electrical water heater with an array of solar panels. The net installed investment cost of the panels is $1,520($1,900 less a 20 % tax credit from the government). Based on an energy audit, the existing water heater use 180 kilowatt hours (kWh) of electricity per month, so at $0.14 per kWh, the cost of operating the water heater is $25.2 per month. Assuming the solar panels can save the entire cost of heating water with electricity, answer the following questions. a. What is the simple payback period for the solar panels? b. What is the IRR of this investment if the solar panels have a life of 12 years?
In this problem, we consider replacing an existing electrical water heater with an array of solar panels. The net installed investment cost of the panels is $1,520($1,900 less a 20 % tax credit from the government). Based on an energy audit, the existing water heater use 180 kilowatt hours (kWh) of electricity per month, so at $0.14 per kWh, the cost of operating the water heater is $25.2 per month. Assuming the solar panels can save the entire cost of heating water with electricity, answer the following questions. a. What is the simple payback period for the solar panels? b. What is the IRR of this investment if the solar panels have a life of 12 years?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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In this problem, we consider replacing an existing electrical water heater with an array of solar panels. The net installed investment cost of the panels is $1,520($1,900
less a 20 % tax credit from the government). Based on an energy audit, the existing water heater use 180 kilowatt hours (kWh) of electricity per month, so at $0.14 per kWh, the cost of operating the water heater is $25.2
per month. Assuming the solar panels can save the entire cost of heating water with electricity, answer the following questions. a. What is the simple payback period for the solar panels? b. What is theIRR of this investment if the solar panels have a life of 12 years?
less a 20 % tax credit from the government). Based on an energy audit, the existing water heater use 180 kilowatt hours (kWh) of electricity per month, so at $0.14 per kWh, the cost of operating the water heater is $25.2
per month. Assuming the solar panels can save the entire cost of heating water with electricity, answer the following questions. a. What is the simple payback period for the solar panels? b. What is the
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