A Homeowner in a Sunny Climate Has the Opportunity to Install

question 30

Multiple Choice

A homeowner in a sunny climate has the opportunity to install a solar water heater in his home for a cost of $2400.After installation the solar water heater will produce a small amount of hot water every day,forever,and will require no maintenance.How much must the homeowner save on water heating costs every year if this is to be a sound investment? (The interest rate is 9% per year. )

• A)$216
• B)$240
• C)$248
• D)$262

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Definitions:

Income Statement

A financial statement that shows a company's revenues, expenses, and profits over a certain period.

Valuation Allowance Accounts

Accounts used to adjust the carrying value of deferred tax assets to the amount that is more likely than not to be realized.

Dividend Yield

An indicator that reveals the annual dividend payment of a company as a percentage of its stock price.

Market Price

This refers to the current price at which an asset or service can be bought or sold in a given market.