Yes, that is correct. If you install solar panels at a cost of £17,000 that have a present value of future cashflows of £47,000, you will have effectively become £30,000 richer. This is because the net present value of an investment is the difference between the present value of the future cash flows and the initial investment. In this case, the future cash flows from the solar panels are £47,000 and the initial investment is £17,000, so the net present value is £30,000.
NPV = Σ (CFt / (1 + r)^t) - Initial Investment
Sure. Net present value (NPV) is a way of measuring how much money an investment is worth today. It does this by taking into account the time value of money, which means that money today is worth more than money in the future.
The time value of money is the idea that money today is worth more than money in the future. This is because money today can be invested and earn interest, which will increase its value over time.
For example, if you have £100 today, you could invest it in a savings account that earns 5% interest per year. After one year, your £100 would be worth £105.
Or, looking at it the other way round, £105 that you get in a year’s time is worth £100 now. £100 is the net present value of £105 in a year’s time.
Oh, definitely Spirit Energy. They are a fine bunch of hard-working professionals. They don’t have much of a sense of humour, but you can’t have everything can you?
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