Not use Ai please gffvjfntwetnykeemsk A wind turbine with a capital cost of $3 million delivers 5million kWh/yr. Assuming a 35% corporate tax rate and a9% corporate discount rate, find the following.a. The present value of the 5-year MACRS (40%, 25%,15%, 10%, 5%, and 5%) depreciation assuming it starts atthe end of the first year of operation.b. The present value of the production tax credit (PTC)assuming a 10-year PTC at a fixed 2.30€/kWh first paid atthe end of the first year of operation.c. What is the net capital cost if we subtract the presentvalues of its MACRS and PTC payments?d. Assuming the above net cost is amortized using a 20-year, 9% CRF, what is the levelized cost of electricity forthis turbine? Compare it to the LCOE without MACRSand PTC.

a) Key Concepts and Formulas Used1. Depreciation and Tax Shield:Depreciation is the allocation of…

Answered: A wind turbine with a capital cost of…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5PB: Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated...

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Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated revenue producing lite of 4 years. Mason has a required rate of return that is 12% and a cost of capital of 11%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?
A corporation expects to receive $32,000 each year for 15 years from the sale of a product. There will be an initial investment of $150,000. Manufacturing and sales expenses will be $8067 per year. Assume straight line depreciation, a 15-year useful life and no salvage value. Use a 46% income tax rate. What is the before and after-tax rate of return?
A project will generate before tax cost savings of $110,000 per year, for five years, create additional depreciation expense of $77,000 per year, and result in the following net working capital needs: Time: Accts Rec Inventory Accts Pay 0 100,000 200,000 120,000 1 150,000 300,000 180,000 2...4 150,000 300,000 180,000 The company's marginal tax rate is 30%. What is the project's cash flow in year 1 (t = 1)? 5000
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Given the initial investment in a factory processing equipment as Ghc500,037. Let the opportunity cost of capital for the industry be 10% p.a. Assuming that the equipment is capable of generating an after-tax returns of Ghc115,000 for the first 5 years and Ghc65000 for the 6th year and Ghc53400 for the 7th year. Find the Net Present Value (NPV) Determine the Internal Rate of Return Identify three ways in which the Net Present value is superior to the Internal Rate of return as investment criteria
Given the initial investment in a factory processing equipment as Ghc500,037. Let the opportunity cost of capital for the industry be 10% p.a. Assuming that the equipment is capable of generating an after-tax returns of Ghc115,000 for the first 5 years and Ghc65000 for the 6th year and Ghc53400 for the 7th year. a. Find the Net Present Value (NPV) b. Determine the Internal Rate of Return c. Identify three ways in which the Net Present value is superior to the Internal Rate of
Account
A project requires an initial investment of $200,000 and expects to produce a cash flow before taxes of $120,000 per year for two years (i.e., cash flows will occur at t= 1 and t= 2). The corporate tax rate is 21 percent. The assets will depreciate using the MACRS 3-year schedule: (t = 1, 33%); (t = 2: 45% ); (t = 3: 15%); ( t = 4: 7%). The company's tax situation is such that it can use all applicable tax shields. The opportunity cost of capital is 12 percent. Assume that the asset can sell for book value at the end of the project. Calculate the NPV of the project (approximately). Multiple Choice $22,463 $19,315 $22,735 $5,721

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