Reference no: EM131835477
Develop a pro forma set of income and cash flow statements for a wind energy plant with the following parameters, and calculate the plant’s NPV:
Overnight costs are $1.2 million, all incurred in Year 0. There is no land acquisition cost assumed here.
The plant has a salvage value of $200,000 at the end of the plant’s life
Annual revenues from spot market sales are $400,000.
Annual operating costs are $30,000.
The plant qualifies for the same 3-Year MACRS schedule that we used in class.
The plant faces a 34% tax rate
There are no accounts payable or receivable, but the plant is assumed to have a cash net working capital requirement of $300,000, beginning in Year 0. This working capital can be liquidated at the end of the final year of operation.
The lifetime of the plant is 5 years
The discount rate is 20%
The plant qualifies for a production subsidy of $200,000 per year for all operating years. A hint here is to model this production subsidy as a revenue source.
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: Develop a pro forma set of income and cash flow statements for a wind energy plant with the following parameters, and calculate the plant’s NPV:
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