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 $1,400 ($2,000 less a 30% tax credit from the government). Based on an energy audit, the existing water heater uses 200 kilowatt hours (kWh) of electricity per month, so at $0.12 per kWh, the cost of operating the water heater is $24 per month. Assuming the solar panels can save the entire cost of heating water with electricity, answer the following questions: Solve, 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 10 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 $1,400 ($2,000 less a 30% tax credit from the government). Based on an energy audit, the existing water heater uses 200 kilowatt hours (kWh) of electricity per month, so at $0.12 per kWh, the cost of operating the water heater is $24 per month. Assuming the solar panels can save the entire cost of heating water with electricity, answer the following questions: Solve, a. What is the simple payback period for the solar panels? b. What is the
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