Determining and evaluating project cash flows for a home solar system You are keen on the use of solar power and have decided to evaluate investing in a solar system for your home.After consulting with several solar contractors, you have learned that the installed cost of solar systems is about $2.17 per kilowatt hour (kWh) of rated production and best practice is to install a solar system egual in capacity to your annual electric consumption.You consume 14,000 kWh a year at a current cost of S0.13 per kWh and future costs per kWh are expected to increase 1.48% per year For the first year of operation, you will receive a tax rebate equal to 22% of the installed cost of the solar system and your marginal tax rate is 25%. Finally, because solar systems have an indefinite life expectancy, you expect to save the cost of electricity for perpetuity. Use the information you have gathered to determine the following:
a.The initial cash flow. b.The periodic cash flow for the first ten years c.Terminal cash flow for year ten using a discount rate of 6%. d. The net present value (NPV) of the project cash flows using a discount rate of 6%.
a. The initial cash flow is $. (Round to the nearest cent. Type a negative number to indicate a cash outflow and a positive number to indicate cash inflow.)
b. Compute the periodic cash flow for the first ten years.
The periodic cash flow in year 1 is $.(Round to the nearest cent. Type a negative number to indicate a cash outflow and a positive number to indicate cash inflow.)
The periodic cash flow in year 2 is $(Round to the nearest cent. Type a negative number to indicate a cash outflow and a positive number to indicate cash inflow.)
The periodic cash flow in year 3 is $. (Round to the nearest cent. Type a negative number to indicate a cash outflow and a positive number to indicate cash inflow.)
The periodic cash flow in year 4 is $(Round to the nearest cent. Type a negative number to indicate a cash outflow and a positive number to indicate cash inflow.)
The periodic cash flow in year 5 is $ (Round to the nearest cent. Type a negative number to indicate a cash outflow and a positive number to indicate cash inflow.)
The periodic cash flow in year 6 is $(Round to the nearest cent. Type a negative number to indicate a cash outflow and a positive number to indicate cash inflow.)
The periodic cash flow in year 7 is $(Round to the nearest cent. Type a negative number to indicate a cash outflow and a positive number to indicate cash inflow.)
The periodic cash flow in year 8 is $(Round to the nearest cent. Type a negative number to indicate a cash outflow and a positive number to indicate cash inflow.)
The periodic cash flow in year 9 is $(Round to the nearest cent. Type a negative number to indicate a cash outflow and a positive number to indicate cash inflow.)
The periodic cash flow in year 10 is $Round to the nearest cent. Type a negative number to indicate a cash outflow and a positive number to indicate cash inflow.)
c. The terminal cash flow in year 10 using a discount rate of 6% is $(Round to the nearest cent. Type a negative number to indicate a cash outflow and a positive number to indicate cash inflow.)
