Financial

NPV Assessment

You have a three payments in the future

  • $1000 four years from now
  • $2000 six years from now
  • $3000 eight years from now

What is the present value of all three of these payments assuming a discount rate of 4%?

CRF Assessment

You are taking out a $50,000 loan for a series of energy efficiency investments. The loan is 10 years, paid anually, at a rate of 3%.

What is your yearly payment for this loan?

CCE Assessment

You purchase a $20,000 energy upgrade and take out a 5% loan over 10 years. As a result, you save 30,000 kilowatt-hours of energy each year.

What is the cost of conserved energy for this upgrade?

CCE Qualitative Assessment

  • Come up with your own example of an energy upgrade and a method to estimate the CCE. Explain how you use the CCE to argue for or against buying the upgrade.

Double Present Dollars

You have a number of present dollars and an equivalent quantity of future dollars. If you double the number of present dollars will the number of future dollars

  1. double
  2. reduce by half
  3. more than double
  4. change by some other rate

Double Length of Time

You have a number of present dollars and an equivalent quantity of future dollars. If you double the length of time, will the equivalent number of future dollars

  1. reduce by half
  2. double
  3. change by another factor

Doubled Interest Rate

You have a number of present dollars and an equivalent quantity of future dollars. If you double the interest rate, will the equivalent number of future dollars

  1. (double, half, other?, more than double, less than double)

Why? (because the number of periods doubles?)

Future Preference

A typical person has a choice between a quantity of present dollars now or a different quantity of future dollars in the future. Is the number of future dollars you choose lesser or greater than you ?

Bank Account Mathematical Model

Does the balance of a savings account follow a

  1. linear model with time
  2. an exponential model over time
  3. another model

Equivalence Principle

State the equivalence principle in your own words.

NPV

What is the closest value to the net present value of three payments using a discount rate of 10%. Year one is 100, year 2 is 200, and year 3 is 300.

  1. $240
  2. $480
  3. $360
  4. $600

Discount Rate

A consumer is indifferent when given a choice of $1000 now or $1280 in 5 years. Which is closest to their personal discount rate?

  1. 3%
  2. 4%
  3. 5%
  4. 6%

Future Value

You make a $1000 purchase on a credit card that has a 1 percent per month interest rate. Unfortunately, you forget about this purchase and the card for two years. What do you owe at the end of this period?

  1. $1000
  2. $2000
  3. $1270
  4. $9850

Cost of Conserved Energy

You purchase 10,000 dollars of insulation and labor to lower your energy costs by taking out a loan with an interest rate of 5% over 10 years.

This allows you to lower your energy costs by 2000 therms of natural gas per year.

What is the equivalent cost of conserved energy for this upgrade?

How does it compare to the cost of natural gas?

Would you recommend this upgrade to a homeowner?