1. A plant operation is scheduled to be developed for a time zero capital cost of $400 million with year 1 through 10 revenues of $200 million per year less operating cost of $100 million per year with zero salvage value. Assume a washout of escalation of operating cost and revenue each year. "Washout" means any operating cost escalation is offset by the same dollar escalation of revenue so profit remains uniform at the today's dollar value profit. Evaluate the project ROR and analyze the sensitivity of the result to changing project life to 5 years or 15 years Evaluate the sensitivity of the project ROR to changing the time zero capital cost to $300 million and $500 million for the 10-year project life. Evaluate the sensitivity of the project ROR to changing the revenue to $250 million and $150 million for the 10-year project life. Plot the results in a Tornado chart.
1. A plant operation is scheduled to be developed for a time zero capital cost of $400 million with year 1 through 10 revenues of $200 million per year less operating cost of $100 million per year with zero salvage value. Assume a washout of escalation of operating cost and revenue each year. "Washout" means any operating cost escalation is offset by the same dollar escalation of revenue so profit remains uniform at the today's dollar value profit. Evaluate the project ROR and analyze the sensitivity of the result to changing project life to 5 years or 15 years Evaluate the sensitivity of the project ROR to changing the time zero capital cost to $300 million and $500 million for the 10-year project life. Evaluate the sensitivity of the project ROR to changing the revenue to $250 million and $150 million for the 10-year project life. Plot the results in a Tornado chart.
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