Solar Company thinking about offering leasing.

A solar company is trying to determine if it should pursue a leasing model, however it is a very capital intensive model. It will need to be determined if it should be done internally, fund it through private investors/loans or both.

Task: Build a 25 year model (preferably via excel) and use the information below to determine if it is feasible for the solar company to pursue this model. To determine this , you will have to know the payback/break-even point in years and months.

Assumptions:

– The solar company can take a 30% federal tax credit and depreciation over 5 years

– Breakeven should be less than 4 years to determine feasibility, if it’s not, go ahead and borrow money at 6% interest rate.

– Ability to invest $1,000,000 per year into deploying new solar assets, and is expected to increase investment by 20 % per year. If its greater than a 4 year payback, assume we will borrow that money instead.

– Model should be flexible where various inputs/assumptions given here can be changed .

Average Customer Info:

– 7000 watt system

– $150 monthly payment over 25 years

– Cost per watt is $2.50