Let's say I can buy solar panels for my business for $5,000 and my payback period is 8 years. Would it be correct to assume that my money is best spent elsewhere (such as paying down debt) if I am being charged an interest rate of 3.9%?
Probably, however, depending on what your business does, solar panels can be a somewhat effective marketing strategy. Also you are helping the environment with your investment in solar panels. On a side note, I didn't think modern solar panels had a payback period of 8 years? From what I've heard it's more like 7 years. Oh well, I don't know much about this topic.
Without doing any calculations, I would assume that paying down debt would be a better use of your money. Solar panels are only going to get less expensive and more efficient with time so waiting before you invest in solar panels is a good idea. Of course, to properly evaluate the prospects of going solar, you should consider the tax credits available in your state and the promotional value to your business.
Solar panels don't financially make sense. PERIOD...at least not yet. They have a short life and the efficiency dies over time. IF you have the money then go for it, but if you have debt then financially you're probably better off paying off that debt. They're more of a luxury item than an investment.
I've done some research in this category, and I came to the conclusion that solar panels are simply too expensive to utilize effectively (at least for me). I was looking into buying them for my house, but I realized how expensive it would be and how little it would help. Maybe for a business it is more reasonable to do, I'm not sure. Either way I wish you luck in your decision, make sure you do your homework and find out everything you can before you go out and buy them. Personally I think if you have a lot of debt, you should try to start paying it down and get it done with. That is just my opinion, I have been studying businesses and economics for years and I believe that the strongest companies have strong balance sheets.
