tion c

An integrated, combined cycle power plant produces 295 MW of electricity by gasifying coal. The capital investment for the plant is $450 million, spread evenly over two years. The operating life of the plant is expected to be 15 years. Additionally, the plant will operate at full capacity 72% of the time (downtime is 28% of any given year). The MARR is 8% per year. a. If this plant will make a profit of two 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? a. The simple payback period of the plant is 12.1 years. (Round up to one decimal place.) It's a high-risk venture. b. The IRR for the plant is %. (Round to one decimal place.)

Today, you have $35,000 to invest. Two investment alternatives are available to you. One would require you to invest your $35,000 now; the other would require the $35,000 investment two years from now. In either case, the investments will end five years from now. The cash flows for each alternative are provided below. Using a MARR of 13%, what should you do with the $35,000 you have? Click the icon to view the alternatives description. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 13% per year. The FW of the Alternative 1 is $ (Round to the nearest dollar.) More Info Year OT N345 0 1 2 Alternative 1 - $35,000 $15,000 $15,000 $15,000 $13,000 $13,000 Alternative 2 $0 $0 - $35,000 $16,500 $16,500 $16,500 0 X

You are considering getting a Little Nero Caesar Salad Franchise, because your boss (the owner of a Down Under Sandwich Shoppe) seems to be making it big.  The Down Under Shoppe grosses an average of $380,000 sales annually.  You estimate that your business will gross an average of 95% of Down Under’s sales.  You must borrow $320,000 from the bank.  The bank will charge you 12% per annum interest on this loan.  You also will invest $50,000 of your savings in the business (thus you will no longer receive the 4% per annum interest from this). NOTE: neither the bank loan principal nor the $50,000 of your savings you invest is an explicit or implicit cost.  However, the interest paid on the bank loan is explicit and the interest foregone on your savings is implicit.  Other estimated explicit expenses are: labor $130,000 per year; rent $12,000 a year; utilities $4,000 a year; and salad ingredients $140,000 a year.  An explicit expense you will have to pay Little Nero, Inc., is a franchise…