Money Smart Kids Challenge (2010)

Solar energy is a renewable alternative energy source. Our sun provides the energy that is the basis of all life on Earth. Solar energy is found everywhere, it is easy to harness, and it can be used in different ways, from heating and cooling to producing electrical and mechanical power. Because it is easy to useand is a non-pollutant, solar energy is becoming a popular energy choice. In recognition of this, a client of yours has decided to retro-fit his home with solar panels. He is veryexcited about the monetary savings that will result from such a move in regards to his monthly energybills as well as the tax benefits he will also receive. He has asked you, as his financial advisor, to assist him in the planning of this endeavor.

During your initial research, you have discovered the following information:1.This will be an extremely costly project. The initial outlay of money must include bothmaterials and labor for installation. In addition, there will be costs involved in tying the panels into the existing electric grid of his home.2.While the monthly savings will be considerable, it will take several months for theamount of money saved to equal or exceed the initial financial outlay.3.The initial outlay of money for this project will have many effects on your client’s dailycash flow and family budget.Your task is to develop a presentation to your client that will help him in this matter. Your presentation should include, but not be limited to, the following items:a)A detailed estimate of the costs involved in the development of the project. (What typesof materials are involved? How much labor? What are the costs for labor? Materials?) b)A schedule estimating your client’s “break-even” date. (What will be the monthly savingsfrom this project? How long will it take the project to pay for itself?)c)A detailed cost-benefit analysis of the project which should include financial benefits aswell as other “un-planned” benefits that may arise from this type of project. Andd)A Specific recommendation, based upon the above three items as well as other information you may determine, as to whether or not your client should undertake this project at this time. Your reasoning for your recommendation should be clear andthorough.e)Please be ready to present and support your findings as well as answer specific questionsin regards to your research and your thought process in determining your recommendation to your client.