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How to calculate feasibility of solar projects?
How to calculate feasibility of solar projects?
A list of residential photovoltaic project sellers presents the savings, year over year for 25 years (typically).
The sum of the savings is then compared to the initial investment. And the result of this calculation shows that the savings are many times the value of the investment.
In theory, then, it would be a spectacular investment!
But...this method is not consistent with discounted cash flows, as it does not take into account interest rates on the investment along the life of the project.
In order to compare correctly, it is necessary to find out what is the monthly costs to amortize the investment considering the interest rate.
The result is way different from what the sales people come up with in their charts.
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