You want to determine whether it will be worth your while to install solar panels on the
Question:
You want to determine whether it will be worth your while to install solar panels on the roof of the building you own. The solar panels will cost £15,000 to install and will provide a cost saving of 10% on your annual electricity bill of £10,000. You intend to sell this building in 10 years’ time and your cost of equity is 8%. Additionally, you can receive a grant from the government of £10,000 in a year’s time if you install the solar panels now. Assume that the cash flows in each year (barring the purchase of the solar panels) occur at the end of the year. Select one:
a. It is only financially beneficial to install the solar panels if the grant is received.
b. It is not financially beneficial to install the solar panels regardless of whether the grant is received or not.
c. Not enough information is provided to answer this question.
d. It is financially beneficial to install the solar panels whether the grant is received or not.