You recently inherited $15,000 from a deceased aunt, who never had children. You have two options...
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You recently inherited $15,000 from a deceased aunt, who never had children. You have two options to use the funds: (1) open a 10-year certificate of deposit (CD) at an interest rate of 1.10% compounded annually, or (2) purchase a 5.25-kWe photovoltaic (PV) system for your home. Ignoring inflation, you must determine which option has the greater financial payback over the next 10 years. The PV system is projected to generate 8500 kWh of electricity each year, and electricity costs 12.5 e/kWh in your city. You consume approximately 1000 kWh per month such that the electricity production will simply save you money on your electric bill. After 10 y of use, which also corresponds to your personal timetable to upgrade to a new home, the PV system is expected to add $5,000 to the value of your present home when you sell it. Which option maximizes the return on your investment of the $15K inheritance. Provide the necessary calculations to support your selection, including the value of each option after 10 yrs. [12 pts] You recently inherited $15,000 from a deceased aunt, who never had children. You have two options to use the funds: (1) open a 10-year certificate of deposit (CD) at an interest rate of 1.10% compounded annually, or (2) purchase a 5.25-kWe photovoltaic (PV) system for your home. Ignoring inflation, you must determine which option has the greater financial payback over the next 10 years. The PV system is projected to generate 8500 kWh of electricity each year, and electricity costs 12.5 e/kWh in your city. You consume approximately 1000 kWh per month such that the electricity production will simply save you money on your electric bill. After 10 y of use, which also corresponds to your personal timetable to upgrade to a new home, the PV system is expected to add $5,000 to the value of your present home when you sell it. Which option maximizes the return on your investment of the $15K inheritance. Provide the necessary calculations to support your selection, including the value of each option after 10 yrs. [12 pts]
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Answer rating: 100% (QA)
SOLUTION 1 Certificate of Deposit CD Initial investment 15000 Interest rate 1... View the full answer
Related Book For
South-Western Federal Taxation 2018 Comprehensive
ISBN: 9781337386005
41st Edition
Authors: David M. Maloney, William H. Hoffman, Jr., William A. Raabe, James C. Young
Posted Date:
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