A solar panel has an installed cost of $2,500, and it reduces the homeowner?s energy bill by $32 per month. The residual value of the solar panel is negligible at the end of its 11-year life. What is the annual effective IRR of this investment? The annual effective IRR of this investment is . (Round to two decimal places.)
Solution
answer
.
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A solar panel has an installed cost of $2-500- and it reduces the home.docx
1. A solar panel has an installed cost of $2,500, and it reduces the homeowner?s energy bill by $32
per month. The residual value of the solar panel is negligible at the end of its 11-year life. What
is the annual effective IRR of this investment? The annual effective IRR of this investment is .
(Round to two decimal places.)
Solution
answer
cost of project 2500
annual inflow=32*12
=$384
we know that at IRR
Annual inflow*pvaf(commulative value)=cost of project
384*pvaf(commulative value)=2500
pvaf=2500/384
=6.5104
NO. of year=11
IRR=9%+6.805-6.51/6.805-6.495*1
=9.95%