Sustainable energy capital investment analysisCentral Plains Power Company is considering an investment in wind farm technology to replace natural gas-generating capacity. Initial installation cost of a wind turbine is expected tobe $1,200 per kilowatt-hour of capacity. The wind turbine has a capacity of generating 2 megawatts per hour. A kilowatt-hour is 1,000 watts generated per hour, and a megawatt houris 1,000 kilowatts generated per hour.Annual operating information related to the wind turbine project was developed as follows:Operating cost per wind turbine megawatt hourVariable operating, fuel, and maintenance costs of natural gas per megawatt hour$10$95Wind turbine operating days per year90a. Determine the initial investment cost of the wind turbine.2,592,000b. Determine the annual cost savings from the wind turbine in replacing natural gas generation. Round to the nearest dollar.205,200 xc. Determine the net present value of the project assuming a 15-year life and 12% minimum rate of return (Hint: Present value of a $1 annuity at 12% for 15 periods is 6.81086).Round to the nearest dollar.

a) Calculate the initial investment cost of the wind turbine Initial investment cost = Turbine…

Answered: Sustainable energy capital investment…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 8P

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Wind turbine capital investment analysis Central Plains Power Company is considering an investment in wind farm technology to reduce natural gas use. Initial installation costs are expected to be $1,200 per kilowatt-hour of capacity. The wind turbine has a capacity of generating 2 megawatts per hour. A kilowatt-hour is 1,000 watts generated per hour, and a megawatt hour is 1,000 kilowatts generated per hour. Annual operating information related to the wind turbine project was developed as follows: Wind capacity factor 25 %* Operating cost per wind turbine megawatt-hour $10 Variable operating, fuel, and maintenance costs per natural gas megawatt-hour $95 Days per year 365 *A factor that measures the reduction from full capacity due to the variability of wind a. Determine the initial investment cost of the wind turbine. b. Determine the annual cost savings from the wind turbine in replacing natural gas generation. Round to nearest whole dollar. c. Determine…
Wind turbine capital investment analysis Central Plains Power Company is considering an investment in wind farm technology to reduce its use of natural gas. Initial installation costs are expected to be $1,200 per kilowatt-hour of capacity. The wind turbine has a capacity of generating 2 megawatts per hour. A kilowatt-hour is 1,000 watts generated per hour and a megawatt hour is 1,000 kilowatts generated per hour. Annual operating information related to the wind turbine project was developed as follows: Wind capacity factor 25%*Operating cost per wind turbine megawatt hour $10 Variable operating, fuel, and maintenance costs per natural gas megawatt hour $95 Days per year 365 *A factor that measures the reduction from full capacity due to the variability of wind a. Determine the initial investment cost of the wind turbine. b. Determine the annual cost savings from the wind turbine in replacing natural gas generation. Round to nearest whole dollar. c. Determine the net present value…
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es United Pigpen is considering a proposal to manufacture high-protein hog feed. The project would make use of an existing warehouse, which is currently rented out to a neighboring firm. The next year's rental charge on the warehouse is $150,000, and thereafter, the rent is expected to grow in line with inflation at 4% a year. In addition to using the warehouse, the proposal envisages an investment in plant and equipment of $1.50 million. This could be depreciated for tax purposes straight-line over 10 years. However, Pigpen expects to terminate the project at the end of 8 years and to resell the plant and equipment in year 8 for $500,000. Finally, the project requires an immediate investment in working capital of $400,000. Thereafter, working capital is forecasted to be 10% of sales in each of years 1 through 7. Year 1 sales of hog feed are expected to be $5.20 million, and thereafter, sales are forecasted to grow by 5% a year, slightly faster than the inflation rate. Manufacturing…
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