This incident reviews the costs and benefits of a decision to consider installing solar panels to supplement or replace electricity provided by the power company. David and Dianne Jones are considering installation of solar panels on their home. The couple has to consider the current costs of energy and compare to anticipated costs associated with implementing solar panel technology. This incident can be used to both develop the quantitative methods used to make a decision, and provide an example of the issues associated with paying for sustainable energy.
After completing the Critical Incident, students will be able to:
1. Identify the characteristics of the solar industry for single-family homes
2. Assess the costs and cost savings from the investment project using both current and estimated energy prices
3. Evaluate the financial results from the investment project
4. Identify additional qualitative and quantitative issues to consider for the investment decision
The CI can be used to incorporate sustainability into the finance curriculum. This CI uses time value of money as the primary tool and is appropriate for an introductory, advanced or personal finance classes, where the idea of time value of money needs reinforcement with real-world scenarios.