Calculation mathematical principle as equation

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Reference no: EM131872569

a) Present a project’s present value calculation’s mathematical principle as an equation. Explain briefly the various elements of your presentation and their significance.

b) The energy-saving investment aims to reduce the energy consumption of the production process. The investment cost is € 120,000, payable 6 months before the investment is put into operation. The investment can be used to avoid electricity consumption of 100 MWh / month (the change is the same throughout the operation period). At the same time, the personnel costs of the process increase by 1,500 € / month. Present the investment cash flow statement and determine with the help of present value calculation whether the investment is profitable with a lifetime of 4 years and a yield requirement of 6%? The electricity price is assumed to be 51 € / MWh.

c) What is the internal rate return of the above investment? (Estimate the internal rate to 0.5 percentage points.)

Reference no: EM131872569

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