Annual heating load by solar energy

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Reference no: EM131545173

A solar plus auxiliary system is proposed for a residence to carry 60% of annual heating load by solar energy. The solar equipment can be purchased for $12,000 with a 10% payment and the balance borrowed on mortgage at 11% interest for 20 years. The market discount rate is 9%. A non-solar heating system would have a fuel cost of $110 for the first year and fuel cost is expected to escalate at 11% a year. Extra maintenance and power cost is $110 for the first year and this to escalate at 7% a year. Extra property tax is expected to be $200 for cost is expected the first year, subject to an inflation rate of 6%. It is estimated that 35% of the interest at the mortgage and extra property tax is deductible from income tax. Resale value of the system years is 20% of initial cost. Calculate the solar savings for the 20-year period.

Reference no: EM131545173

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