Solar electric system to reduce the amount of electricity

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DJ is considering the purchase of a $20,000 solar electric system to reduce the amount of electricity he purchases from the grid. The system has an area of 25 m^2. The average solar flux at DJ's house is 200 W m^-2 (averaged over 24-hours and over an entire year). DJ pays $0.10 per kW-h for electricity from the grid. The solar system is 10% efficient. Assume that all these numbers are constant for the entire life of the system (i.e., we are modeling this in real terms). Further, assume that DJ will use all the power he produces.

a. Assuming DJ will live in his house for 10 years, and using a real MARR of 10% per year compounded yearly, should DJ purchase the system? Assume that when he sells his house the system will have no value and no impact on the price of his home.

Reference no: EM131562455

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