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1. Your firm is considering an investment in a wind farm. Assume that the farm will cost $1 million per MW of installed capacity. The plan under consideration would deploy 10 GE 1.5 MW. You are to assess the after-tax profitability of this plan. The wind farm will be placed in a Class 6 wind area, generating an estimated average of 8760 MWh per turbine per year. The price of energy produced is $0.067 per kwh and a production tax credit provide an additional $0.022 per kwh for the first 10 years. You can obtain a very low interest loan for your investment, with an effective interest rate of 2.5% that you will pay off over 30 years. Assume that transmission lines will be provided by a local utility at no cost. Operating expenditures are $10,000 per year, mostly for insurance and occasional maintenance. Your corporate tax rate is 30%. Discount real profits or losses at a rate of 10%. For the three options below, generate an annual nominal cash flow, annual before tax profits, annual after-tax profits, and net present value after tax of the windfarm for the first 20 years (using traditional NPV calculations-do not worry about WACC), assuming zero salvage value and that you have no other deductions or credits for taxation except interest and-
1. The wind turbines can be straight-line depreciated over 15 years.
2. The wind turbines can be MACRS depreciated at 300% declining balance over 6 years, switching to straight-line depreciation on the adjusted basis (as in 4) if ever that provides a greater deduction.
3. The wind turbines can be depreciated 100% in the first year.
Is the wind farm profitable in NPV terms under any of these scenarios after 20 years? Which depreciation method is preferable? Why?
Illustrate the strategic positioning tools? Strategic positioning tools according to Reck and Long: • Passive (as clerical and transaction based) purchasing functions only o
Mountain States Electric Service is an electrical utility company serving several states in the Rocky Mountains region. It is considering replacing some of its equipment at a gener
Research suggests that a party with an attractive BATNA will likely receive a more positive outcome if it hides the information from the other side.
Explain all types of worker's participation. Types of Worker's Participation - Worker's participation in management may take several forms, for example: (a) Formal partici
1 Page maximum for the whole question] : College students are "invincible". They study on the floor, spread their materials on the floor and lean over to access them, slouch in a c
What is the present value of the following annuities? a. $2,500 a year for 10 years discounted back to the present at 7% b. $70 a year for 3 years discounted back to the pres
Definition of a Project •Analyze how project management supports the concept of strategic planning.
Suppose that you are the manager of a production department that uses 400 boxes of rivets per year. The supplier quotes you a price of $8.50 per box for an order size of 199 boxes
In e-mails writers sometimes use abbreviations such as FYI(for your information), ASAP(as soon as possible). Others writers sometimes use LOL (laughing out loud), 4 u(for you), gr9
It is your first day at ABC Computer Repair and a very angry customer walks into the shop. They instantly start yelling at you and telling you that one of the techs did not do a go
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