Nowadays it is very important to reduce one's carbon "footprint" (how much carbon we produce in our daily lifestyles). Minimizing the use of fossil fuels and instead resorting to renewable sources of energy (e.g., solar energy) are vital to a "sustainable" lifestyle and a lower carbon footprint. Let's consider solar panels that prewarm the water fed to a conventional home water heater. The solar panels have an installed cost of $3,300, and they reduce the homeowner's energy bill by $453 per year. The residual value of the solar panels is $627 at the end of their 11-year life. What is the annual IRR of this investment? Use the trial-and-error method starting with an initial guess of 11%. (a) The annual IRR of this investment is %. (Round to two decimal places.) (b) If the homeowner's MARR is 8%, is the investment economical?

Nowadays it is very important to reduce one's carbon "footprint" (how much carbon we produce in our daily lifestyles). Minimizing the use of fossil fuels and instead resorting to renewable sources of energy (e.g., solar energy) are vital to a "sustainable" lifestyle and a lower carbon footprint. Let's consider solar panels that prewarm the water fed to a conventional home water heater. The solar panels have an installed cost of $3,300, and they reduce the homeowner's energy bill by $453 per year. The residual value of the solar panels is $627 at the end of their 11-year life. What is the annual IRR of this investment? Use the trial-and-error method starting with an initial guess of 11%. (a) The annual IRR of this investment is %. (Round to two decimal places.) (b) If the homeowner's MARR is 8%, is the investment economical?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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