I had one course in accounting and am struggling with doing an opportunity cost graph. The graph involves investments growing in value over 25 years. The first two are easy enough, but I'm uncertain how to handle the third one -- specifically with setting the value of the initial point (year 0). Details:
Retail price:$12,900 -- $8,000 in hardware, $4,900 in services Net Cost: $5,900 (after incentives, rebates, etc). Hardware depreciation: assume linear with $2,000 residual value at year 25. Net Asset Earnings:$400/yr
On one hand, I can see year 0 starting at the cost point ($5,900) then laying hardware depreciation and earnings on top of that over 25 years.
On the other hand, I can see year 0 starting at $8,000 (because that's the value I have, regardless of cost), then laying hardware depreciation and earnings on top of that over 25 years.
Which of these would be correct - or is there an even better way?
**For the skeptics who think this is someone's homework:**
If you look on any discussion board about residential solar power, you'll find all sorts of wild claims about solar financials so I thought I'd write a small paper to share on ND/FB/... about how to do financials given the specifics of our utility. I'm using my own system (11 panels w/ a SunnyBoy converter) as the model for calculations. Over CY2025, my system produced 4,839KWH, credited to my utility bill at $0.0991/KWH. I'm using $140/yr for operating costs ($90 for addt'l insurance a+ $50 for misc. expenses). I am in my 70s and a long way past that one accounting course I had (and did poorly in).