A town in Wyoming wants to drill a geothermal well to provide district heating steam and hot water for its businesses and residences. After government subsidies, the capital investment for the well is $418,000, and the geothermal well will reduce natural gas consumption for steam and hot water production by $50,000 per year. The salvage value of the well is negligible. The simple payback period for this well is 9 years. If the MARR of the town is 6% per year and the life of the geothermal well is 25 years, what is the IRR for this project? Choose the closest answer below. OA. The IRR for the project is 12.1% per year. OB. The IRR for the project is 8.3% per year. OC. The IRR for the project is 13% per year. OD. The IRR for the project is 11.1% per year. COLL

A town in Wyoming wants to drill a geothermal well to provide district heating steam and hot water for its businesses and residences. After government subsidies, the capital investment for the well is $418,000, and the geothermal well will reduce natural gas consumption for steam and hot water production by $50,000 per year. The salvage value of the well is negligible. The simple payback period for this well is 9 years. If the MARR of the town is 6% per year and the life of the geothermal well is 25 years, what is the IRR for this project? Choose the closest answer below. OA. The IRR for the project is 12.1% per year. OB. The IRR for the project is 8.3% per year. OC. The IRR for the project is 13% per year. OD. The IRR for the project is 11.1% per year. COLL

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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