***Internal rate of Return Question*** 23- You want to buy a solar system to your store. a. If the monthly energy bills you get now is $125. b. The solar panel system is expected to be usable for 30 years. c. The cost of the solar panels system is $18,000. d. The solar panels system will provide all the electricity for your store. e. There will be a 26% federal tax break for purchasing the solar panels system 1. What is the IRR % (..........) 2. Yes or no, based on IRR is this a good investment (...........)
***Internal rate of Return Question*** 23- You want to buy a solar system to your store. a. If the monthly energy bills you get now is $125. b. The solar panel system is expected to be usable for 30 years. c. The cost of the solar panels system is $18,000. d. The solar panels system will provide all the electricity for your store. e. There will be a 26% federal tax break for purchasing the solar panels system 1. What is the IRR % (..........) 2. Yes or no, based on IRR is this a good investment (...........)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:### Internal Rate of Return Question
#### You want to buy a solar system for your store.
a. If the monthly energy bills you get now is **$125**.
b. The solar panel system is expected to be usable for **30 years**.
c. The cost of the solar panels system is **$18,000**.
d. The solar panels system will provide all the electricity for your store.
e. There will be a **26% federal tax break** for purchasing the solar panels system.
1. What is the **IRR %** (..................)
2. Yes or no, based on **IRR** is this a good investment (..................)
#### Problem Explanation
In this scenario, you are looking at the financial viability of purchasing a solar panel system for your store. The data given will help you calculate the internal rate of return (IRR), which indicates the expected profitability of the investment.
- **Monthly Savings**: You will save $125 every month on energy bills.
- **Investment Duration**: The solar panel system will last for 30 years.
- **Initial Cost**: The upfront cost of the system is $18,000.
- **Federal Tax Break**: You can deduct 26% of the initial cost from your taxes.
#### Questions to Answer
To determine if this is a good investment:
1. Calculate the IRR (%).
2. Decide based on the IRR whether investing in the solar panel system is a wise financial decision (Yes or No).
### Instructions
Only answer these questions if you are sure about the correct answer.
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