Sally wants to install solar panels on the roof of her home; an 11-panel system should...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Sally wants to install solar panels on the roof of her home; an 11-panel system should generate 3,250 kWh of electricity each year of operation. Sally currently uses an average of 600 kWh per month of electricity and assume, for simplicity, that her use of electricity will remain constant over the next 20 years. Sally's electric utility company currently charges $0.14 per kWh (regardless of how much electricity is used each month), but will raise its electricity rates by 5% per year for the next 20 years. The solar company that Sally is working with gives customers 2 options to pay for their solar panels: Option 1, full prepay (FPP), requires customers to pay the full cost of installation ($7,378) up front but make no monthly payments. Option 2, partial prepay (PPP), requires customers to initially pay part of the cost of installation ($4,916) and make payments of $26/month for the next 20 years. Develop a spreadsheet model to help Sally choose between these two payment options. In addition to finding the cumulative 20-year savings of installing solar panels over not installing them, calculate the net present value of the annual savings over 20 years (including the cost in year 0). Over 20 years, your model should track the following quantities: A) Year; B) Annual electric bill with no solar panels; C) Annual electric bill with solar panels; D) Annual Savings with FPP option; E) Annual Savings with PPP option; F) Cumulative savings with FPP option; and G) Cumulative savings with PPP option. Start your model in year 0, with the upfront costs of each payment plan shown as a negative number; every year after should show the savings from installing solar panels as a positive number, e.g., Year 0 3 Annual Electric Bill No Solar With Solar $1,008 $1,058 $553 $581 : Annual Savings FPP -$7,378 $455 $478 : PPP -$4,916 $143 $166 : Cumulative Savings FPP PPP -$7,378 -$4,916 -$6,923 -$4,773 -$6,445 -$4,607 : : To Do: 0. Name your Excel file "A2-LastnameFirstname" and submit on iLearn by the due date. 1. Sheet 1: Build a model that follows the format used in lectures, e.g., use range names and appropriate cell styles for inputs, calculated quantities, and outputs. Then: a. Make a 1-way data table where the annual growth rate in utility electricity prices varies from 2% to 7% in 1% increments, and the outputs are the cumulative 20-year savings and the NPV of both FPP and PPP. Use a 4% interest rate in the NPV calculation. b. Make a 2-way data table for the cumulative 20-year savings for the PPP option, where the growth rate in utility electricity price varies from 2% to 7% in 1% increments, and the lease cost per month varies from $20 to $35 in $3 increments. 2. Sheet 2: Make a line chart of cumulative savings (in columns F & G) from both payment options by year. 3. Sheet 3: Give brief answers to the following questions. a. Which payment option appears to be the better one for Sally, and (briefly) why? Sally wants to install solar panels on the roof of her home; an 11-panel system should generate 3,250 kWh of electricity each year of operation. Sally currently uses an average of 600 kWh per month of electricity and assume, for simplicity, that her use of electricity will remain constant over the next 20 years. Sally's electric utility company currently charges $0.14 per kWh (regardless of how much electricity is used each month), but will raise its electricity rates by 5% per year for the next 20 years. The solar company that Sally is working with gives customers 2 options to pay for their solar panels: Option 1, full prepay (FPP), requires customers to pay the full cost of installation ($7,378) up front but make no monthly payments. Option 2, partial prepay (PPP), requires customers to initially pay part of the cost of installation ($4,916) and make payments of $26/month for the next 20 years. Develop a spreadsheet model to help Sally choose between these two payment options. In addition to finding the cumulative 20-year savings of installing solar panels over not installing them, calculate the net present value of the annual savings over 20 years (including the cost in year 0). Over 20 years, your model should track the following quantities: A) Year; B) Annual electric bill with no solar panels; C) Annual electric bill with solar panels; D) Annual Savings with FPP option; E) Annual Savings with PPP option; F) Cumulative savings with FPP option; and G) Cumulative savings with PPP option. Start your model in year 0, with the upfront costs of each payment plan shown as a negative number; every year after should show the savings from installing solar panels as a positive number, e.g., Year 0 3 Annual Electric Bill No Solar With Solar $1,008 $1,058 $553 $581 : Annual Savings FPP -$7,378 $455 $478 : PPP -$4,916 $143 $166 : Cumulative Savings FPP PPP -$7,378 -$4,916 -$6,923 -$4,773 -$6,445 -$4,607 : : To Do: 0. Name your Excel file "A2-LastnameFirstname" and submit on iLearn by the due date. 1. Sheet 1: Build a model that follows the format used in lectures, e.g., use range names and appropriate cell styles for inputs, calculated quantities, and outputs. Then: a. Make a 1-way data table where the annual growth rate in utility electricity prices varies from 2% to 7% in 1% increments, and the outputs are the cumulative 20-year savings and the NPV of both FPP and PPP. Use a 4% interest rate in the NPV calculation. b. Make a 2-way data table for the cumulative 20-year savings for the PPP option, where the growth rate in utility electricity price varies from 2% to 7% in 1% increments, and the lease cost per month varies from $20 to $35 in $3 increments. 2. Sheet 2: Make a line chart of cumulative savings (in columns F & G) from both payment options by year. 3. Sheet 3: Give brief answers to the following questions. a. Which payment option appears to be the better one for Sally, and (briefly) why?
Expert Answer:
Answer rating: 100% (QA)
To help Sally choose between the two payment options for installing solar panels we can develop a spreadsheet model that calculates the cumulative savings over 20 years and the net present value NPV o... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0071339476
Volume 1, 6th Edition
Authors: Beechy Thomas, Conrod Joan, Farrell Elizabeth, McLeod Dick I
Posted Date:
Students also viewed these accounting questions
-
The solar panels on the roof of a house measure 4.0 m by 6.0 m. Assume they convert 12% of the incident EM wave's energy to electric energy. (a) What average power do the panels supply when the...
-
A university spent $1.8 million to install solar panels atop a parking garage. These panels will have a capacity of 500 kw, have a life expectancy of 20 years and suppose the discount rate is 10%. a....
-
How much firewood is used for household heating where you live? For cooking? Is it a necessity?
-
Displacement vector A(vector) points due east and has a magnitude of 2.00 km. Displacement vector B(vector) points due north and has a magnitude of 3.75 km. Displacement vector C(vector) points due...
-
The ledger of Rolling Hills Corporation contains the following accounts: Common Stock, Preferred Stock, Treasury Stock, Paid-in Capital in Excess of ParPreferred Stock, Paid-in Capital in Excess of...
-
A current of 10 A flows through a toroid that has 300 circular windings per meter measured along the interior edge of the windings. The radius of each circular winding is \(20 \mathrm{~cm}\), and the...
-
The Bode plot of shaft vibration of a turbine obtained during coast-down is shown in Fig. 10.44. Determine the damping ratio of the system when the static deflection of the shaft is equal to \(1.27...
-
1. Identify the ethical culture problem at Texaco in the mid-1990s. 2. Based on the facts in the case and what you have learned in this chapter, evaluate the culture change effort that is under way....
-
Suppose that you have a short position in 10 3-month call option contracts. How do you hedge this long position in calls using 3-month puts? Should you long or short the puts? And how many put...
-
Garden Glory Project Questions Assume that Garden Glory designs a database with the following tables: OWNER (OwnerID, OwnerName, OwnerEmail, OwnerType) OWNED_PROPERTY (PropertyID, PropertyName,...
-
Define each of the following concepts and provide an illustration where necessary. Nonsatiation Bads Partial Equilibrium Perfect Competition
-
What is machine learning? What is the key to unlocking machine learning? Explain in details.
-
Write and explain FIVE examples of how events/ideas from Canadian history have shaped/influenced the world in which we are living today. You are to connect the past/history of Canada to the present....
-
What is the dividend yield of a stock which just paid a dividend of $6, has an expected growth rate of 0.12 and a current price of $36?
-
E&A Industries is planning an issue of 10-year, $1,000 par value zero coupon bonds to generate cash for a planned acquisition. If the YTM on the bonds will be 6.2% (assume semiannual compounding) and...
-
If Carissa has a $168,000 home insured for $100,000, based on the 80 percent coinsurance provision, how much would the insurance company pay for a claim of $14,700? Note: Do not round intermediate...
-
2) Analyze the following sequential circuit and derive the flip flop input and output equations, state equations and state diagram. A CLK- Q DQ Q DQ
-
On October 1, 2021, Adoll Company acquired 2,600 shares of its $1 par value stock for $38 per share and held these shares in treasury. On March 1, 2023, Adoll resold all the treasury shares for $34...
-
When several capital assets are purchased for a single lump- sum consideration, cost apportionment is usually employed. Explain how you would determine the allocation to different categories. Why is...
-
On 1 July 20X4, Theriout Corporation acquired a manufacturing plant in Cape Breton for $ 1,750,000. The plant, employing 50 workers, began operation immediately and is expected to be in operation for...
-
The August bank reconciliation for C& C Limited: Balance per bank..................... $ 151,570 Plus: outstanding deposits 17,900 Less: Outstanding cheques ($ 11,245, $ 650, $ 1,570, $ 890, $ 120).....
-
A closed vessel having a volume of \(2.84 \mathrm{~m}^{3}\) contains \(1.365 \mathrm{~kg}\) of mixture of water and steam at a pressure of 7 bar. Find how much heat must be added to the vessel to...
-
In steam tables, the entropy is shown as zero for (a) saturated vapour at atmospheric pressure (b) saturated liquid at atmospheric pressure (c) saturated vapour at \(0^{\circ} \mathrm{C}\) (d)...
-
Water equivalent of calorimeter is given by (a) \(\frac{m_{c a l} \times c_{p c}}{c_{p w}}\) (b) \(\frac{m_{c a l}}{c_{p w}}\) (c) \(\frac{m_{c a l}}{c_{p c}}\) (d) \(\frac{m_{c a l} \times c_{p...
Study smarter with the SolutionInn App