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 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. $ 2,400,000 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 of the project assuming a 15-year life and 12% minimum rate of return. (Use the present value tables in Appendix A.) Feedback V Check My Work Partially correct
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 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. $ 2,400,000 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 of the project assuming a 15-year life and 12% minimum rate of return. (Use the present value tables in Appendix A.) Feedback V Check My Work Partially correct
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter11: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 8P: The Rodriguez Company is considering an average-risk investment in a mineral water spring project...
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