What average inflation rate on electricity

Reference no: EM13181181

You are looking to install a new solar energy system for your house (for heating, air conditioning, and hot water). The cost of the system is $14,000 and the annual savings in electricity for this system today is $2500. This system has a lifespan of 15 years.

a) What is the rate of return for this system if electricity prices do not inflate during the life of the system?

b) What average inflation rate on electricity must be experienced over the system's life to provide a rate of return of 25%?

Reference no: EM13181181

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