Calculate the irr and npv based on after-tax cash flows

Assignment Help Financial Management

Reference no: EM131887737

You have been approached by a developer with South Carolina solar project. Your manager wants to understand how attractive S.C. market could be or not the particular opportunity is feasible and meets the company’s investment criteria:

The Following part is the information regarding the project:

Investment Date: 2014

Commercial Operation Date: 2015

Life of Plant: 20 years (assume no terminal value)

Depreciation Assumptions: 5-year straight line depreciation (assume no salvage value)

Production per-year: 50,000 MWh

Price (you get for each MWh you deliver): $150/MWh (Price will be escalating at the rate of CPI)

CPI: 2.5%

Capital Expenditure: $40,000,000 (Cost of the Plant)

Operating Expenses: Operating expenses (COGS) are 25% of EBITDA for year 1 and escalating each year at CPI.

Investment Tax Credit: South Carolina provides 3% investment tax credit on the initial investment.

Taxes: 35%

Based on the information provided, please calculate the IRR and NPV based on the after-tax cash flows and discount rate is 8%. What is your assessment?

Reference no: EM131887737

Questions Cloud

Behavioral and dietary changes : Explain IN DETAIL what behavioral and dietary changes will need to be made by you to make each of the above weaknesses, strengths rather than weaknesses?

Calculate total interest : Calculate his monthly payment for a 20-year mortgage at 3.5%. Calculate total interest.

Higher on the inside of neurons : The concentration of sodium is usually higher on the inside of neurons, compared to outside. Sodium will move outside of neurons through

What is the role of the rough endoplasmic reticulum : What is the role of the rough endoplasmic reticulum and the Golgi apparatus in the production and release of proteins?

Calculate the irr and npv based on after-tax cash flows : calculate the IRR and NPV based on the after-tax cash flows and discount rate is 8%. What is your assessment?

Differentiate in response to specific stimuli : Give one example, other than mechanical stimuli, that leads to cellular differentiation.

Primary advantages of applying direct write-off method : Based on the information in the video, discuss the primary advantages and disadvantages of applying the direct write-off over the allowance method.

Compare strategic controls and financial controls : Compare and contrast strategic controls and financial controls. Provide specific examples of how each may be used to best serve a corporation.

Probability of down move in the price of the future : Use a two-step binomial tree, the probability of a down move in the price of the future is _____%

User Account

All Pages