8. An integrated, combined cycle power plant produces 285MW of electricity by gasifying coal. The capital investment for the plant is $570 million, spread evenly over two years. The operating life of...


8. An integrated, combined cycle power plant produces 285MW of electricity by gasifying<br>coal. The capital investment for the plant is $570 million, spread evenly over two years.<br>The operating life of the plant is expected to be 20 years. Additionally, the plant will operate<br>at full capacity 75% of the time (downtime is 25% of any given year).<br>a. If this plant will make a profit of three cents per kilowatt-hour of electricity sold to the<br>power grid, what is the simple payback period of the plant? Is it a low-risk venture?<br>Tabulate the net cash flow and the cumulative PW.<br>b. What is the IRR for the plant? Is it profitable?<br>

Extracted text: 8. An integrated, combined cycle power plant produces 285MW of electricity by gasifying coal. The capital investment for the plant is $570 million, spread evenly over two years. The operating life of the plant is expected to be 20 years. Additionally, the plant will operate at full capacity 75% of the time (downtime is 25% of any given 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? Tabulate the net cash flow and the cumulative PW. b. What is the IRR for the plant? Is it profitable?

Jun 05, 2022
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