Im trying to use excel to assess a solar panel quote given to me.
They have given me the cost of the panel. I can calculate the savings after 1 year based on the current tariff (electricity price per kwh usage). The tariff is expected to increase per year (based on index)
A need a excel formula that can calculate the number of years until the total savings match the upfront cost of the panel.
Its based on cost = savings/year (based on current tariff) x (1 + %annual increase in tariff) to the power of number of years)
Currently the variables are:
C = Cost = $7000
S = Savings/year (based on current tariff) = $1100
I = Index based on %annual increase in tariff = 3%
But my formula No. of years = LOG(C/S,I) is getting strange answer of 63.
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gh_userAuthor Commented:
Hi Alexandre. I cant seem to close question. (I have been able to rate your answer as best solution). I think the problem is due to question being abandoned due to my delay in responding. I have put in request to get rectified.
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gh_userAuthor Commented:
WELL EXPLAINED
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1.684488685 using 3
and
-0.527754004 using 3%
Can you show me where you got this formula from?
You can see details of Discounted Payback Period at
http://accountingexplained.com/managerial/capital-budgeting/discounted-payback-period