Q1

My annual electricity usage is 10,800 kWh. Ignoring seasonal variation let's assume that the usage is 900 kWh per month. Each month, Duke Energy charges for my electricity usage as follows.

Fixed cost - $ 9

First 300 kWh - $ 0.13 per kWh

Next 600 kWh - $ 0.09 per kWh

I also pay a 7% tax on total bill.

My electricity usage is expected to stay at the same level for 30 years, but Duke is expected to raise charges by 2% each year.

Blue Raven Solar has proposed to fix 26 solar panels on my roof for a cost of $ 26,300. These panels can be used for 30 years. During the first year they produce 10,300 kWh and that drops by 0.5% each year due to system degradation.

I want your help to find my internal rate of return from this project if I go with this proposal.

My internal rate of return as a percentage is ________________

My annual electricity usage is 10,800 kWh. Ignoring seasonal variation let's assume that the usage is 900 kWh per month. Each month, Duke Energy charges for my electricity usage as follows.

Fixed cost - $ 9

First 300 kWh - $ 0.13 per kWh

Next 600 kWh - $ 0.09 per kWh

I also pay a 7% tax on total bill.

My electricity usage is expected to stay at the same level for 30 years, but Duke is expected to raise charges by 2% each year.

Blue Raven Solar has proposed to fix 26 solar panels on my roof for a cost of $ 26,300. These panels can be used for 30 years. During the first year they produce 10,300 kWh and that drops by 0.5% each year due to system degradation.

This is what I already told you.But, I forgot to tell you one important thing.

There is a 26% Federal tax credit for goingsolar!

This means if I spend $ 26,300 in year 1, I will get 26% of that amount back in year 2 when I file my tax return.

I want your help to find my internal rate of return from this project considering this tax incentive too.

My internal rate of return as a percentage is ________________

Q2

You buy a 5% coupon bond for $1000 and sell it for $1,200 after a year. Your rate of return is ______%.