Prepare a spreadsheet showing the npv for each year

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Reference no: EM131231542

Repeat the previous problem, but assume that the cost of installation is to be repaid at 7% interest over 15 years and that the electricity costs escalate at 10% per year. Compare the NPV of the solar system in Problem 2.7 to that of an electric heating system over a 15 year period, then discuss whether or not the solar system is a good investment relative to the payback Time. Also prepare a spreadsheet showing the NPV for each year.

Problem 2.7

A rooftop solar hot water heater with collector areas of 8 m² and storage of 640 L is installed in Phoenix, Arizona, on a house that uses 160 L/day of hot water at 60°C. Of the total energy required, 70% is supplied by solar energy (the solar fraction is 70%) and 30% is supplemented with an electric heater. The solar system costs $3000 for installation, whereas an electric water heater and tank for the same supply costs $800 for installation. Assuming that the electricity cost is $0.10/kWh and does not change over time, estimate the simple payback time for the solar hot water heater. The temperature of the water in the main from which it is to be heated is 10°C.

Reference no: EM131231542

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