An energy firm is betting on wind power's long-term viability in Texas and plans to erect what would be one of the biggest wind farms in the world with 200 wind turbines costing some $1.69 million each. Energy companies investing in wind power are also expecting governments to toughen rules relating to traditional energy sources, as part of long-term efforts to reduce global-warming emissions. But generating power from wind is not profitable for companies without government tax breaks. The following financial and technical data have been compiled for furtherconsideration: • Number of wind turbines to be built: 200 units• Power capacity: 310,000 kW• Capital investment required: $338,000,000• Project life: 20 years• Salvage value of the wind turbines after 20 years: $0• Annual net cash flows {after all deductions): $41,391,160According to the data provided, answer the following questions:(a) What is the projected IRR on this investment?(b) If the company's MARR is known to be 10%, is the investment justified?
An energy firm is betting on wind power's long-term viability in Texas and plans to erect what would be one of the biggest wind farms in the world with 200 wind turbines costing some $1.69 million each. Energy companies investing in wind power are also expecting governments to toughen rules relating to traditional energy sources, as part of long-term efforts to reduce global-warming emissions. But generating power from wind is not profitable for companies without government tax breaks. The following financial and technical data have been compiled for further
consideration:
• Number of wind turbines to be built: 200 units
• Power capacity: 310,000 kW
• Capital investment required: $338,000,000
• Project life: 20 years
• Salvage value of the wind turbines after 20 years: $0
• Annual net cash flows {after all deductions): $41,391,160
According to the data provided, answer the following questions:
(a) What is the projected
(b) If the company's MARR is known to be 10%, is the investment justified?
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