Question 8

You are considering installing solar panels on your roof, which you expect will reduce your utility bill by $1300 in the first year (assume end of year), with the savings growing at a 3.4% annual rate thereafter for the foreseeable future (assume perpetual). If the installation costs $13,000 after all federal and state tax credits and the appropriate discount rate is 13%, what is the NPV of this investment? Round to the nearest cent.

Question 9

What is the NPV of a project that costs $33,000 today and is expected to generate annual cash inflows of $11,000 for the next 7 years, followed by a final inflow of $14,000 in year 8. Cost of capital is 8.4%. Round to the nearest cent.