You are considering purchasing an 11.6KW solar system for your house to be installed on January 1. This involves a large expenditure today but promises lower electricity bills in the future. The question is: what is the most you are willing to pay for the solar panels? Assumptions: The panels will last for 30 years, then stop working and have no resale value. Find the average electricity rate paid from the data pasted at the bottom of this page, and assume this rate will increase 2.5% per year indefinitely. You pay your entire electricity bill at the beginning of the year. Get rough estimates for solar output here: http (Links to an external site.)://pvwatts.nrel.gov (Links to an external site.)/ (Links to an external site.) You receive a 30% tax credit for the cost of the panels and installation (so you only pay 70%). Use an annual interest rate of 10%. Installing the panels gives you an immediate $5000 benefit from knowing you did something environmentally friendly.

KwH Bill December 1653 $ 213.55 November 1538 $ 189.01 October 1907 $ 242.41 September 2359 $ 311.42 August 2732 $ 365.40 July 2808 $ 376.40 June 2851 $ 382.62 May 2526 $ 326.92 April 1901 $ 238.61 March 1805 $ 225.05 February 1424 $ 176.38 January 1389 $ 171.20