On Thu, 09 Mar 2006 01:30:30 GMT, Mark wrote:
Calculate your own Tax-Free Return On Investment [ROI]:

$ _____ Estimated Savings
$ _____ Divided by Unit Cost
%_____ Equals ROI

No, that is not correct because you have spent the principle. What you
have calcuated is an annual return on invested capital, annual ROIC.

Return on Investment is calculated using Total Return (TR) and Unit Cost (UC):

ROI = (TR - UC) / UC

For example, if you put $1000 (UC) into a certificate returning 6% (ROI)
simple interest, after one year you will get back $1060 (TR). So:
( $1060 - $1000 ) / $1000 = 0.06
or 6% ROI.

Since on your solar system you spent the principle...
* unit cost (UC) is the price of the system, plus the 6% you do not get
* total return (TR) is the savings

Unless the TR (savings) is more than you could have received by
investing the money (guaranteed IBonds are paying more than 6% right
now), you will never have a positive return on investment.

In the best case, the system will save more than the lost investment
compounded every year. And the system will last long enough to return
the principle. And then you can start calculating positive ROI.

Or else just buy it to feel good... That's why I have some PV.

sdb
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