Determining the payback period in years

Assignment Help Macroeconomics
Reference no: EM132482905

Austin needs to purchase a new heating/cooling system for his home. He is thinking about having a geothermal system installed, but he wants to know how long it will take to recoup the additional cost of the system. The geothermal system will cost $20,500. A conventional system will cost $6,000. Austin is eligible for a 30% tax credit to be applied immediately to the purchase only if he chooses the geothermal system. He estimates that he will save $1,500 per year in utility bills with the geothermal system. These cash outflows can be assumed to occur at the end of the year. The cost of capital (or interest rate) for Austin is 6%. How long will Austin have to use the system to justify the additional expense over the conventional model? In other words, what is the DISCOUNTED payback period in years? Discount future cash flows before calculating payback rounded UP to a whole year

Reference no: EM132482905

Questions Cloud

Determine the number of units of Widgets for Dorchester : Current variable costs are $7 a unit and fixed costs are expected to total of $154,000. Determine the number of units of Widgets for Dorchester to breakeven
Determine the free cash flow of soap : Determine the free cash flow (FCFF) of Soap Ltd for years 1 & 2.
Determine the amount to be paid in full settlement : Determine the amount to be paid in full settlement of each of two invoices (a) and (b), assuming that credit for returns and allowances
Determining the operating income-rao construction : Rao Construction recently reported $20.50 million of sales, $12.60 million of operating costs other than depreciation, and $3.00 million of depreciation
Determining the payback period in years : In other words, what is the DISCOUNTED payback period in years? Discount future cash flows before calculating payback rounded UP to a whole year
What is the npv of the loan from her parents perspective : Assume a 5% cost of capital. Assume there is no risk of default, and that compounding is monthly. What is the NPV of the loan from her parents' perspective?
Discuss the implications of accepting moral theory : Explain how utility is calculated and apply this to the case, for Kantianism, you must apply the categorical imperatives - Make sure you present the theory
Compute which of the two statements is correct : Compute Which of the two statements is correct? The one-year interest rates for the USD and EUR are: rUSD = 1% and rEUR = 5%.
Prepare the journal entry for Arness to record the sale : Arness estimates the fair value of the recourse liability to be $8,000. Prepare the journal entry for Arness to record the sale

Reviews

Write a Review

Macroeconomics Questions & Answers

  Reasoning behind the development of clec

What was the reasoning behind the development of CLECs? How does this compare to the developments of traditional telephone companies getting into video services or video services companies getting into offering broadband internet access?

  Difference between gdp-nominal gdp-real gdp

1. What is the difference between GDP, nominal GDP, Real GDP, GDP per worker and GDP per capita? 2. What were your reason for selecting the other country?

  What is a balance sheet

What is a balance sheet? What is the accounting equation? Define each term in the accounting equation.

  Estimated demand for the company product

Ilucidate the estimated demand for the company's product. Determine the point cross price elasticity.

  Describe the given statement

Economists believe that if economy's expenditures increases, that will help in economic growth of any country.-Do you agree?

  Discuss the differences among commodity money and fiat money

Discuss the differences among commodity money and fiat money, making sure to explain what makes fiat money work.

  Discuss and explain the nature of social and labor issues

Discuss and explain the nature of social and labor issues that domestic producers will likely face with their international suppliers.

  What equation would you use to find growth

What equation would you use to find growth. Fill out GDP deflator column. Fill out inflation rate column. Graph the Inflation rate with time on the horizontal axis and inflation rate on vertical axis.

  Determine the future market condition and trends analysis

On the industry for Goldmans Sach overview following refined topical areas determine the Future market condition and trends analysis for the following?

  Consumer improve level of satisfaction

1) Refer to Goods X and Y. Suppose the consumer is spending all of his income buying some of both goods. If the marginal value of X is greater than the relative price of X, how can the consumer improve his level of satisfaction?

  What is the appropriate fiscal and monetary policy mix

1.Consider an open economy with flexible exchange rates. Suppose output is at the natural level, but there is a trade de cit.

  Consumption or additions to the capital stock

GDP less the part of the years output that is needed to replace the capital goods worn out in producing the output; the nations total output available for consumption or additions to the capital stock is known as?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd