In this problem, we consider replacing an existing water heater with an array of solar panels. The net installment cost of the panels is $1260($2100 less a 40% tax credit from the government) Based on an energy audit the existing water uses 190 kilowatt hour of electricity per month, so at $0.12 per kWh, the cost of operating the water heater is $22.8 per month. Assuming the solar panels can save the entire cost of heating water with electric, answer the following questions.
A) What is the simple payback period for the solar panel?
B) What is the IRR of this investment if the solar panels have a life of 11 years?