Economics of Energy
Net Present Value is a better measure to use than Internal Rate of Return when comparing a
number of possible efficiency measures that are "mutually exclusive", meaning
only one can be implemented. For example, NPV is a good measure to use when
trying to determine what level of insulation to add to an attic. Only one level of
insulation can be chosen, i.e. they are mutually exclusive. Analyze each level of
insulation as a separate calculation in the above calculator. Choose the level that
produces the highest NPV.
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