4. A solar sea power plant (SSPP) is being considered in a North American location known for its high temperature ocean surface and its much lower ocean temperature 100 meters below the surface. Power can be produced based on this temperature differential. With high costs of fossil fuels, this particular SSPP may be economically attractive to investors. For an initial investment of $100 million, annual net revenues are estimated to be $15 million in years 1-5 and $20 million in years 6-20. Assume no residual market value for the SSPP. a. What is the simple payback period for the SSPP? b. What is the discounted payback period when the MARR is 6% per year? c. Would you recommend investing in this project?

Structural Analysis
6th Edition
ISBN:9781337630931
Author:KASSIMALI, Aslam.
Publisher:KASSIMALI, Aslam.
Chapter2: Loads On Structures
Section: Chapter Questions
Problem 1P
icon
Related questions
Question
Payback Period Method and Benefit-Cost Ratio Method
4. A solar sea power plant (SSPP) is being considered in a North American location known for its high
temperature ocean surface and its much lower ocean temperature 100 meters below the surface. Power can
be produced based on this temperature differential. With high costs of fossil fuels, this particular SSPP
may be economically attractive to investors. For an initial investment of $100 million, annual net revenues
are estimated to be $15 million in years 1-5 and $20 million in years 6-20. Assume no residual market
value for the SSPP.
a. What is the simple payback period for the SSPP?
b. What is the discounted payback period when the MARR is 6% per year?
c. Would you recommend investing in this project?
Transcribed Image Text:4. A solar sea power plant (SSPP) is being considered in a North American location known for its high temperature ocean surface and its much lower ocean temperature 100 meters below the surface. Power can be produced based on this temperature differential. With high costs of fossil fuels, this particular SSPP may be economically attractive to investors. For an initial investment of $100 million, annual net revenues are estimated to be $15 million in years 1-5 and $20 million in years 6-20. Assume no residual market value for the SSPP. a. What is the simple payback period for the SSPP? b. What is the discounted payback period when the MARR is 6% per year? c. Would you recommend investing in this project?
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
Recommended textbooks for you
Structural Analysis
Structural Analysis
Civil Engineering
ISBN:
9781337630931
Author:
KASSIMALI, Aslam.
Publisher:
Cengage,
Structural Analysis (10th Edition)
Structural Analysis (10th Edition)
Civil Engineering
ISBN:
9780134610672
Author:
Russell C. Hibbeler
Publisher:
PEARSON
Principles of Foundation Engineering (MindTap Cou…
Principles of Foundation Engineering (MindTap Cou…
Civil Engineering
ISBN:
9781337705028
Author:
Braja M. Das, Nagaratnam Sivakugan
Publisher:
Cengage Learning
Fundamentals of Structural Analysis
Fundamentals of Structural Analysis
Civil Engineering
ISBN:
9780073398006
Author:
Kenneth M. Leet Emeritus, Chia-Ming Uang, Joel Lanning
Publisher:
McGraw-Hill Education
Sustainable Energy
Sustainable Energy
Civil Engineering
ISBN:
9781337551663
Author:
DUNLAP, Richard A.
Publisher:
Cengage,
Traffic and Highway Engineering
Traffic and Highway Engineering
Civil Engineering
ISBN:
9781305156241
Author:
Garber, Nicholas J.
Publisher:
Cengage Learning