"Jim Thomlinson" wrote:
Are you sure that is correct.

Yes; and you could confirm that yourself with less than 60 seconds of
effort.

But first, you need to understand my interpretation of the problem for which
I provided a solution. I believe that Kyle is asking: what is the sum of
the cost (or cost saving?) over 30 years if the cost (or cost saving?) the
first year is $0.17 times 21,128 kWh, and the cost (or cost saving?)
increases 5% each year.

If you disagree that that is what Kyle asked for, fine. We simply have a
difference of opinion of the definition of the problem. If you disagree
with Kyle that that's the problem to solve, that's another matter
altogether. I am simply saying that FV solves my interpretation of Kyle's
problem.

To demonstrate....

Let A1 be the cost the first year: =21128*0.17. Let A2 be the cost the
second year: =21128*0.17*(1+5%). But that's just: =A1*(1+5%). Let A3 be
the cost the third year: =21128*0.17*(1+5%)*(1+5%). But that's just:
=A2*(1+5%). So drag A2 down through A30. Then =SUM(A1:A30) is the total
cost (or cost saving?) over 30 years.

Now compare that SUM with FV(5%,30,-0.17*21128,0). QED.


FV is normally used to calculate the future value of an investment.

Fred is better at explaining the concepts behind this. I can only explain
the algebra.

Consider an investment of P dollars at the end of each year, with a growth
rate of 5%. At the end of the second year, the investment value is
P*(1+5%)+P. At the end of the third year, the value is (P*(1+5%)+P)*(1+5%),
which is P*(1+5%)^2 + P*(1+5%) + P. At the end of thirty years, the value
is P*(1+5%)^29 +...+ P*(1+5%) + P. FV(5%,30,-P,0) is the result of the sum.

Now consider my interpretation of Kyle's problem. The cost (or cost
saving?) in the first year is P, where P=kWh*$0.17. The cost in the second
year is P*(1+5%), as demonstrated by the A1:A30 model above. The cost in
the second year is P*(1+5%)^2. The cost in year 30 is P*(1+5%)^29. The
total cost (or cost saving?) over 30 years is P + P*(1+5%) +...+
P*(1+5%)^29.

Look familiar? QED.


----- original message -----

"Jim Thomlinson" wrote in message
...
Are you sure that is correct. FV is normally used to calculate the future
value of an investment. That is if I put money into a retirement
investment
every year for the next 20 years with the interest compunding how much
money
will I have to retire on. That does not seem to apply to this situation.
--
HTH...

Jim Thomlinson


"Joe User" wrote:

"Kyle P." wrote:
I need to determine how much money a solar array
will save one of my customers over the next thirty years.

=FV(5%,30,-0.17*21128,0)

You can check this by changing 30 to 3 and computing the following 3-year
formula:

=21128*(0.17 + 0.17*(1+5%) + 0.17*(1+5%)^2)


----- original message -----

"Kyle P." wrote:
Hello,
I need to determine how much money a solar array will save one of my
customers over the next thirty years.

I'd like to know the formula to calculate this.

Inputing: 17 Cents per kWh.
21,128 kWh's per year
a 5% increase in the cost of electricity per year.
(17cents
per kWh increasing by 5% every year).
over 30 years.

Help Please! Thanks.