A man of 25 years old starts investing small amounts in solar farms and continues making these
Question:
A man of 25 years old starts investing small amounts in solar farms and continues making these investments through his preretirement years. At retirement, the investor has accumulated 5 to 10 of these solar shares. The question is; what is the net cash flow of these investments when the investor reaches retirement (65 years old)?
Assumptions:
Price of the solar panel shares: $1,500
The initial investment is $5,000 USD. $2,000 is cash and $3,000 borrowed = $5,000.
The interest rate on the borrowed $3,000 loan is 6%.
a) The annual ROI on the $5,000 investment is:________?
b) The loan payment on the $3,000 loan is________?
When the loan is paid off the investor repeats the process. Now they own 2 Solar units.
c) With the additional cash flow of 2 units and the continued borrowing of $3,000 on the second unit, how long will it take to pay off the 2nd unit?
Expert Answer:
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