Analyzing the possibility of building power plant

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Reference no: EM132036968

A company is analyzing the possibility of building a power plant with an initial investment of $ 400,000 that will save $ 60,000 per year in terms of production losses and energy cost reductions. This power plant has an economic life of 20 years and requires an overhaul every 10 years of operation at a cost of $ 30,000. Perform a comprehensive economic analysis (Net present value and IRR) to determine whether the investment is feasible or not. Given the 15% capital cost and residual value of the power plant at the end of the 20th year is $ 40,000.

Reference no: EM132036968

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