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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: velocistar237 on August 17, 2015, 02:58:49 PM

Title: Google's Project Sunroof -- NPV correct?
Post by: velocistar237 on August 17, 2015, 02:58:49 PM
Google has introduced Project Sunroof to help people understand their solar options.

Here's an example (https://www.google.com/get/sunroof#a=55%20Beacon%20St%2C%20Boston%2C%20MA%2C%20United%20States&b=150&f=buy&np=28&p=1).

In the example, the up-front cost is $20K.

Go down to the bottom and click "Show detailed estimates." Under "Total 20-year savings" it says the NPV is $23.7K with a 4% discount rate.

Sure, $23.7K > $20K, but with a discount rate that reflected typical stock market returns, wouldn't it be a loss? I thought solar was supposed to have a decent payback. What am I missing?
Title: Re: Google's Project Sunroof -- NPV correct?
Post by: karmatroll on August 17, 2015, 05:35:55 PM
Your understanding of NPV is a little incorrect.  NPV means that solar cells will earn you $23K in today's dollars taking into account the 20K investment you'll have to make.

So it's not that 23K>20K it's 23K>0K
Title: Re: Google's Project Sunroof -- NPV correct?
Post by: velocistar237 on August 17, 2015, 06:26:14 PM
Your understanding of NPV is a little incorrect.  NPV means that solar cells will earn you $23K in today's dollars taking into account the 20K investment you'll have to make.

So it's not that 23K>20K it's 23K>0K

Thanks, I should have known that. Net means benefit minus cost. I was thrown off by the similarity in the numbers.