You are keen on the use of solar power and have decided to evaluate investing in a solar system for your home. After consulting with several solar contractors, you have learned that the installed cost of solar systems is about $2.69 per kilowatt hour (kWh) of rated production and best practice is to install a solar system equal in capacity to your annual electric consumption. You consume 11,000 kWh a year at a current cost of $0.15 per kWh and future costs per kWh are expected to increase 1.42% per year. For the first year of operation, you will receive a tax rebate equal to 23% of the installed cost of the solar system and your marginal tax rate is 20%. Finally, because solar systems have an indefinite life expectancy, you expect to save the cost of electricity for perpetuity. Use the information you have gathered to determine the following: 

a. The initial cash flow. 

b. The periodic cash flow for the first ten years. 

c. Terminal cash flow for year ten using a discount rate of 6% 

d. The net present value (NPV) of the project cash flows using a discount rate of 6%.

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a. The initial cash flow is $ b. Compute the periodic cash flow for the first ten years. The periodic cash flow in year 1 is $ The periodic cash flow in year 2 is S The periodic cash flow in year 3 is S The periodic cash flow in year 4 is $ The periodic cash flow in year 5 is $ The periodic cash flow in year 6 is $ The periodic cash flow in year 7 is S The periodic cash flow in year 8 is $ The periodic cash flow in year 9 is $ The periodic cash flow in year 10 is $ c. The terminal cash flow in year 10 using a discount rate of 6% is $[ d. The NPV of the project cash flows using a discount rate of 6% is $ a. The initial cash flow is $ b. Compute the periodic cash flow for the first ten years. The periodic cash flow in year 1 is $ The periodic cash flow in year 2 is S The periodic cash flow in year 3 is S The periodic cash flow in year 4 is $ The periodic cash flow in year 5 is $ The periodic cash flow in year 6 is $ The periodic cash flow in year 7 is S The periodic cash flow in year 8 is $ The periodic cash flow in year 9 is $ The periodic cash flow in year 10 is $ c. The terminal cash flow in year 10 using a discount rate of 6% is $[ d. The NPV of the project cash flows using a discount rate of 6% is $

Answer rating: 100% (QA)

a The initial cash flow is 269 per kWh 11000 kWh 29590 The tax rebate is 23 of the installed cost of ... View the full answer