Financial Analysis Calculation

Page Financial Analysis > (Financial Analysis Parameters) Edit

The Financial Analysis consists of the following pages:

• General Parameters

• Income and Expenditure

• Financing

• Tax

Move through the Financial Analysis by using the Continue>> and << Back buttons at the bottom of the window.

Or move by using the left-hand navigation bar to jump straight to the required page.

Every window contains a Help button (in the bottom right corner) which gives help in respect of the required entry parameters.

135 15.1.1 FA – General Parameters

Page Financial Analysis > (Financial Analysis Parameters) Edit > General Parameters

Assessment Period

Only complete years, not including the year in which the system starts operation, should be entered for the Assessment Period.

According to German standard VDI 6025, the Assessment Period is the time period of planning base for the calculation of financial analysis (planning horizon).

The Assessment Period should be based on the investment with the shortest Service Life. If the Service Life of an investment is less than the Assessment Period, the investment will have to be repurchased.

If the Service Life of an investment is greater than the Assessment Period, the investment will have a residual value at the end of the Assessment Period, which is included in the capital value calculation.

Annual Average Return on Capital

As Annual Average Return on Capital, the Internal Rate of Return can be used. The Internal Rate of Return is the average yield from fixed interest bonds. In Germany, the German Federal Bank determines this from the average yields on outstanding debt securities. The Rotating Net Yield is therefore a measure of the interest level on the bond market.

Sales Tax

This entry field does not influence the calculation, but is there to make clear that all amounts should be entered either with or without sales tax. As a rule, all amounts should be entered as net sums. However, if you enter a gross amount, you should make sure that all entries are gross.

15.1.2 FA - Income and Expenditure

Page Financial Analysis > (Financial Analysis Parameters) Edit > Income and Expenditure

• Tax deductible Outgoing cost of system setup parts and labor

are the total acquisition costs (net) for the PV system (materials, structure, installation, data logger) that are required to build the plant.

The Period of Use is the time period measured in years of the economic use of an investment object.

- If Period of Use < Assessment Period -> The investment will have to be repurchased. The price of repurchase is based on the Inflation given.

- If Period of Use > Assessment Period -> The investment will have a residual value at the end of the Assessment Period, which is included in the net present value calculation.

The Inflation indicates the average percentage change of a payment in comparison with the previous year.

• One-off Payments (non-Tax deductible Outgoing cost of system setup parts and labor)

One-off payments arise at the time the system starts operation. One-off payments cannot be written-off against tax. They are taxed directly.

• Incoming Subsidies

Subsidies reduce the costs. They do not influence tax depreciation, but are taxed directly.

• Outgoing annual Operating Costs

Example: Battery replacement after X years

• Annual Consumption Costs

• Outgoing other annual Costs

• Incoming other annual income/savings

The feed-in remuneration for the first year is calculated based on the Feed-in Tariff and the amount determined in the simulation.

-> How to list all incomes and expenditures:

1. Enter the amount.

2. Select the unit**:

- absolute (€, €/a) or

- specific (€/kWp, €/(kWp*a) or % of investment, % of investment/a).

(not available with Detailed Entry)

**Note: The currency (here: €) is taken from the settings of your computer.

3. When you are done entering the costs, continue >> on the next page.

Financial Analysis - Income and Expenditure

137 1. OR: If you want to enter a number of positions within a cost group, check

Detailed Entry.

This will automatically take you to the corresponding page. In the frame on the left side, this cost group appears under Income and expenditure.

! Enter the expenditures as positive values. Enter the savings as negative values!

On the page Income and expenditure, this cost group is deactivated and shows the sum of the cost group.

2. Click on Add Position to add a new cost to the list.

3. To delete a position,

- first highlight the row by clicking on the position no. in the first column, - then click on Delete Position.

4. Continue >> on the next page.

15.1.3 FA - Financing Reference

Here you can give the loan a name, which will then appear in the Project Report.

Loan Capital

The amount of credit, with the calculation based on interest and repayment. The loan amount can be entered as an absolute figure in euros or as a percentage of the investment volume. Investment Volume is understood here as the investments plus one-off payments less subsidies.

Payment Installment as a percentage of the loan capital (Discount)

This value specifies which percentage amount of the loan capital entered is actually paid.

The loan amount paid is based on the loan capital multiplied by the disbursement rate.

The Total Disbursements

for all loans should not be greater than the Investment Volume defined above. You will also need to define whether the loan is an Installment Loan or an Annuity Loan.

Installment Loan

With this kind of loan, repayments are made in equal installments. The amount of interest to be paid is recalculated after each installment from the remaining amount of debt. The total repayment amount is calculated from repayments which remain constant and interest on an amount which reduces over the period.

Annuity Loan

With this kind of loan, repayments are made in equal installments over the repayment period. The loan repayment amount as a percentage of the installment increases with the number of installments, while the interest percentage sinks correspondingly.

Period

The loan-repayment period.

Loan Interest

Nominal Interest Rate to be paid on the remaining debt.

Repayment-Free Initial Years

During this period no repayments, but only interest payments are made. In the remaining time up to the end of the period, the loan capital is repaid in installments.

Repayment Interval

Interest and installments are paid at these intervals.

139 15.1.4 Taxes

With a profitable investment the inclusion of tax payments has a negative impact on the results. The results only improve with changing tax rates. A change in tax rate is possible, for example, if the investor retires after 10 years. If, at the time that the system starts to enter the profit zone, the investor is making losses on other investments, the tax rate could also be set at zero.

-> Proceed as follows:

1. In order for tax payments to be included in the financial analysis, you will need to select the Allow for Tax field.

2. Enter the Marginal Tax Rate for Income/Corporation Tax.

This is the tax rate that needs to be paid for each additional taxable Euro. The amount should also appear in your tax assessment.

3. If you select Allow for Change in Marginal Tax Rate,

- you need to give a number of years for Change of Tax Rate after

- and define the New Tax Rate , which then will come into the calculation.

4. Depreciation

- Enter the Depreciation Period: This is the period over which the investment can be written-off against tax. The usual period for photovoltaic systems is 20 years.

- Enter the Depreciation Type:

Linear (straight line): Annual depreciation is calculated from the investment amount divided by the depreciation period.

Degressive (reducing balance): Annual depreciation is not constant, but is calculated as follows:

Investments that have not yet been depreciated are multiplied with the rate of depreciation. This leads to a year by year decrease in the annual depreciation. If the annual depreciation sinks below the value that is obtained through linear depreciation, the residual value is calculated as linear depreciation for the remaining period.