Find cost of hydro plant that makes both equal investment

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Reference no: EM131546516

An electrical utility wishes to decide on whether to build a steam generating power plant or a hydro power facilty. Find the cost of the Hydro plant that makes both choices an equal investment. The interest rate for both choices is 5% compounded annually.

The details for the steam plant are:

Life: 20 years

Initial cost: $10,000,000

Annual Power output: 300,000 MWh

Maintenance cost: $0.004/kWh

Salvage value: 10% of Initial cost

The hydro plant:

Life: 30 years

Annual Power output: 300,000 MWh

Maintenance cost: $0.002/kWh

Salvage value: 10% of initial cost

Reference no: EM131546516

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