Question

A solar collector which has plastic glazing is to be installed. It is expected that the glazing will have to be replaced every 3 years. The cost of its replacement now is $15/m^2 and is expected to inflate at 7%/year. What is the present worth of the cost of maintaining the glazing on a 75 m^2 collector array over a period of 20 years if the market discount rate is 10%/year?

HINT:

Glazing = $15/m^2

Ac = 75 m^2
N = 20 years, i=7%,d=10%

(1+i)^3 = 3 yr interest rate
(1+d)^3 = 3 yr discount rate
N = 6 (There are 6 three year period in the 20 years) Costj= Costj-1*Ac
PW= Glazing*Ac(1+i)3 *PWF(N,i,d)

Year. ____Cost ($) ____PW ($)

3 _______1378.17____ 1035.44 6 ....
9 .....
12
15
18 ......

Answer 1