An integrated, combined cycle power plant produces 280 MW of electricity by gasifying coal. The capital investment for the plant is $690 million, spread evenly over twoyears. The operating life of the plant is expected to be 17 years. Additionally, the plant will operate at full capacity 78% of the time (downtime is 22% of any given year). TheMARR is 5% per year.a. If this plant will make a profit of three cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant? Is it a low-risk venture?b. What is the IRR for the plant? Is it profitable?O

The objective of the question is to calculate the simple payback period and the internal rate of…

Answered: An integrated, combined cycle power…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The maintenance on a machine is expected to be 3,500, P7,000, 10,500, and 14,000 for the second, third, fourth, and fifth year, respectively. Then the present equivalent value at the beginning of the first year if the interest is 6% per year is Blank 1. Blank 1 Add your answer
An investor invests the following amounts of money in a bank account: R18,850 on 1 September 2019 , R15,575 on 31 May 2021 and R19,465 on 1 February 2023. From 1 October 2021 up to 30 April 2023 an amount of R980 is invested at the start of every month. From 1 July 2020 up to 31 March 2022 an amount of RX is invested at the end of each quarter. On 1 January 2019 the total present value of all the investments is R75,998.34. If the interest rate is 8.75% per year, calculate the value of X (annuity invested every quarter)
The heat loss through the exterior walls of a certain manufacturing plant is estimated to cost $29000 at EOY 1. ABC Insulation, Inc., told the owner of the plant that the heat loss can be reduced by 80% if he is willing to spend $401,000 to install its innovative insulation material. The cost of heat loss is expected to rise by $2100 per year (uniform gradient) after the next year. The owner plans to keep the present building for 15 more years. Assume MARR (minimum acceptable rate of return) is 4% per year. (a) What is the present equivalent value of the cost savings in the reduction of heat loss for these 15 years? Round off your final answer to nearest thousand. (b) Using AW method, would you recommend the owner to install ABC's new insulation material? Why?
Mark sold his house. In addition to cash, he took a mortgage on the house. The mortgage will be paid off by monthly payments of P12, 345 for 10 years. He decided to sell the mortgage to a local bank. The bank will buy the mortgage, but requires a 1% per month interest rate on their investment. How much will the bank pay for the mortgage?
4. Maintenance costs for a small bridge with an expected 60-year life are estimated to be $1,000 each year for the first five years, followed by a $10,000 expenditure in the 15th year a $10,000 expenditure in year thirty. If i = 10% per year, what is the equivalent uniform annual cost over the entire 60-year-period?
What is the IRR for an investment of $X that returns $Y at the end of each year for Nyears? X=$11,040 Y=$992.25 N=41 years
Maintenance expenses for a bridge on the Ohio River are estimated to be $25,000 per year for the first 6 years, followed by three seprate $100,000 expenditures in years 12, 15, and 18 . The expected life of the bridge is 50 years , if i = 7% per year, what is the equivalent uniform annual expenses over the entire 50-year period? a) S-16,622 b) $-15,368.03 c) $ -14,725.52 d) None of the above
Question Number 5 You will deposit money into a bank account according to the following schedule: Today 4 year from today 6 years from today 8 years from today 12 years from today $182,000 $78,000 $136,000 $115,000 $94,000 After 12 years from today, what will be the purchasing power of the money in your bank account, expressed in today's dollars?. You bank pays interest at 7.000% per year, compounded annually. Inflation is expected to be 4.520% per year.
An engineer planning for her retirement will deposit 10% of her salary each year into a stock found. The initial balance in her stock found (year 0) is $20,000. If her salary this year is $120,000 (end of year 1) and she expects her salary to increase by 5% each year, what will be the future worth of the found after 25 years if it earns 15% per year? $4,202,290.77 $5,480,462.35 O $5,315,867.58 O $4,138,818.64 O $3,543,911.72
3) Find the rate of return (IRR-Ch16.3) on a project that will cost $100,000 today and $400,000 in 3 years from today, BUT will return $50,000 at the end of every year for 11 years (4)
A certain medical device will result in an estimated $15,000 reduction in hospital labor expenses during its first year of operation. Labor expenses (and thus savings) are projected to increase at a rate of 7% per year after the first year. Additional operating expenses for the device (maintenance, electric power, etc.) are $3,500 annually, and they increase by $250 per year thereafter (i.e., $3,750 in year two and so on). It is anticipated that the device will last for 10 years and will have no market value at that time. If the MARR is 10% per year, how much can the hospital afford to pay for this device? Use an Excel spreadsheet in your solution.
Find the IRR of an investment having initial cash outflow of $213,000. The cash inflows during the first, second, third and fourth years are expected to be S65,200, $96,000, S73,100 and $55,400 respectively. Assume thatris 10%.

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