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Investigation 2

Payback Time

It is sometimes difficult for individuals to realize that when it comes to conservation, every little bit makes a difference. If a person is making a good salary, it does not seem urgent to install a solar water heater in order to save on energy bills. When buying a new home, it’s not very appealing to pay thousands of dollars more for extra insulation or double-paned windows, so as to save money on energy in later years. “Sure, it will pay off in two or three years, but I need the money now!”

Let’s say you just bought your first house. After moving in you discover your heating and cooling bill averages about $150 per month, which you think is too high. You install double-paned windows and insulate the ceilings and walls. It costs you $2,000 for these improvements.

Your next energy bill arrives—it’s $50. Let’s assume you average bill is now $50 a month and you know you are going to stay in your house for at least five years.

• What is your payback time?

• How much money do you save while you live in your house?

• Do you think you’ve added value to the house?

• Now assume your original average bill was $100 per month instead of $150 per month. Answer the above three questions again using this information.