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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?
Problem: A leather company manufactures leather jackets and leather handbags. A leather jacket requires 8 square feet of leather, while a handbag requires 2 square feet. In ad
Explain the factors affecting motivation . Factors influencing motivation: Achievement-Personal satisfaction in problem solving and job completion. Advancement-Promot
Which market do customers who have purchased and are driving Audi automobiles represent? a. Target market b. Available market c. Potential market d.
HOW TO CARE FOR A TODDLERn #Minimum 100 words accepted#
Do you think that inadequate strategic planning was a factor that resulted in the company''s asking for trade protection?
Objectives of Production and Operation Management Production is an organized activity in a manufacturing organization. Each organized activity should spell out its objectives so
After working for 30 years, Ramjee Somjee Dutt opted for VRS and started a courier company and did very well in the first four years. He was now looking for expansion of his busine
The injection molding department of a company uses an average of 30 gallons of special lubricant a day. The supply of the lubricant is replenished when the amount on hand is 170 ga
proof V=C((n/(n-1))^n)(r/(r*T+r)^n
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