he homeowner is interested in reducing her energy bills to save some money. She is considering purchasing photovoltaic panels to generate the heating energy required over the winter months, in addition to the needed energy to cool the house in the summer, lighting, running appliances, etc. She is looking to make this decision from a purely financial perspective, and is not sure if she should move forward or not.

Two options are available in the Flagstaff market, as shown in the table below. You are hired as a consultant to compare the two options and provide a recommendation (to either invest or do nothing). Your recommendation will be based only on a Net Present Value (NPV) comparison, in which you will use a 2%interest rate.

P= A x ((1+i)^n-1)/(ix(1+i)^n)P= F/(1+i)^n

Calculate theNet Present Valuefor Panels Type A.

Solar Panels Type A Solar Panels Type BInitial cost

17,408

To be determined laterYearly savings

857

To be determined laterSalvage value

2,685

To be determined laterLife span (years)

30

To be determined later

The second option available in the Flagstaff market is Solar Panel Type B, as shown in the table below. Calculate the Net Present Value for Type B, using an interest rate of 2%.

Solar Panels Type BInitial cost

30,620

Yearly savings

1,531

Salvage value

6,066

Life span (years)

30

Regardless of what you calculated in the previous two questions, let's assume that you calculated a negative NPV for Type A, as well as a negative NPV for Type B. If NPV (A) < NPV (B), which option would you recommend to the homeowner?

Group of answer choices

Solar Panels Type A

Solar Panels Type B

The "Do Nothing" Option