Reference no: EM132416674

 A 200 MW power plant produces enough electricity to meet demand of a small city. If we assume that, their use of electricity will increase at a rate of 5% per year, when will they need a second 200 MW plant? How many power plants they need to build per year over next 30 years? If a new power plant costs $1,000,000 per MW, how much money (in present's value) must the community spend on building new power plants over the next 30 years? Produce the cash flow diagram.

• Assume the plant uses 100 % of its peak value.
• The interest rate is 10% yearly The cost of building of a new power plant is constant over 30 years
• The city builds a new power plant at the beginning of the year when demands exceeds current capacity

Please state all other assumptions and references