Central Plains Power Company is considering an investment in wind farm technology to reduce its use of natural gas. Initial installation costs are expected to be $1,200 per kilowatt-hour of capacity. The wind turbine has a capacity of generating megawatts per hour. A kilowatt-hour is 1,000 watts generated per hour and a megawatt hour is 1,000 kilowatts generated per hour. Annual operating information related to the wind turbine project was developed as follows: Wind capacity factor 25 %" Operating cost per wind turbine megawatt hour $10 Variable operating, fuel, and maintenance costs per natural gas megawatt hour $95 Days per year 365 "A factor that measures the reduction from full capacity due to the variability of wind a. Determine the initial investment cost of the wind turbine. $ 2,400,000 b. Determine the annual cost savings from the wind turbine in replacing natural gas generation. Round to nearest whole dollar. $ 372,300 v c. Determine the net present value of the project assuming a 15-year life and 12% minimum rate of return. (Use the present value tables in Appendix A.)
Central Plains Power Company is considering an investment in wind farm technology to reduce its use of natural gas. Initial installation costs are expected to be $1,200 per kilowatt-hour of capacity. The wind turbine has a capacity of generating megawatts per hour. A kilowatt-hour is 1,000 watts generated per hour and a megawatt hour is 1,000 kilowatts generated per hour. Annual operating information related to the wind turbine project was developed as follows: Wind capacity factor 25 %" Operating cost per wind turbine megawatt hour $10 Variable operating, fuel, and maintenance costs per natural gas megawatt hour $95 Days per year 365 "A factor that measures the reduction from full capacity due to the variability of wind a. Determine the initial investment cost of the wind turbine. $ 2,400,000 b. Determine the annual cost savings from the wind turbine in replacing natural gas generation. Round to nearest whole dollar. $ 372,300 v c. Determine the net present value of the project assuming a 15-year life and 12% minimum rate of return. (Use the present value tables in Appendix A.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
I need help in question c
Transcribed Image Text:Present Value of Ordinary Annulty of $1 per Perlod
Present Value of Ordinary Annulty of $1 per Period
Periods
4.0%
4.5%
5%
5.5%
6%
6.5%
7%
Periods
8%
9%
10%
11%
12%
13%
14%
0.96154
0.95694
0.94340
0.00090
0.90909
1.73554
2.48685
3.16987
3.79079
1
0.95238
0.94787
0.93897
0.93458
1
0.92593
0,91743
0.89286
0,88496
0.87719
1.88609
2.77509
3.62990
1.87267
2.74896
3.58753
4.38098
1.85941
1.84632
1.83339
1.82063
1.80802
1.78326
1.75911
1,71252
1.69005
1,66810
1,64666
2.72325
3.54595
4.32948
2.64848
342580
2.53129
3.23972
3.88965
2.36115
2.97447
2.32163
2.91371
3.43308
2.67301
2.62432
3
2.57710
2.44371
2.40183
3.31213
3.99271
4
3.50515
3.46511
3.38721
4
3.10245
3.03735
5
4.45182
4.27028
4.21236
4.15568
4.10020
5
3.60590
3.60478
3.51723
5.24214
4.99553
4.91732
5.58238
6.20979
6.80169
4.84101
4.76654
5.38929
5.97130
6
5.15787
5.07569
4.62288
4.48592
4.35526
4.23054
4.11141
3.99755
3.88867
5.89270
6.59589
7.26879
5.78637
6.46321
7.10782
7.72173
6.00205
5.48452
5.03295
5.53482
5.99525
7
5.68297
7
5.20637
4.86842
4.71220
4.56376
4.42261
4.28830
5.33493
5.75902
6.33457
6.08875
6.65610
6.73274
8
5.74664
5.14612
4.96764
4.79677
4.63886
7.43533
8.11090
6.51523
7.02358
6.95220
6.24689
5.53705
5.32825
5.13166
4.94637
10
7.91272
7.53763
7.36009
7.18883
10
6.71008
6.41766
6.14457
5.88923
5.65022
5.42624
5.21612
8.76048
9.38507
9.98565
8.52892
9.11858
7.88687
8.38384
8.85268
7.49867
7.94269
8.35765
7.13896
7.53608
6.80519
7.16073
6.49506
6.81369
5.45273
5.66029
11
8.30641
8.09254
7.68904
11
6.20652
5.93770
5.68694
8.61852
9.11708
12
8.86325
8.15873
12
6.49236
6.19437
5.91765
7.90378
8.22424
8.55948
7.48690
7.78615
6.12181
6.30249
6.46238
13
9.68285
9.39357
8.59974
13
7.10336
6.74987
6.42355
5.84236
10.22283
10.73955
8.74547
9.10791
6.96187
7.19087
6.62817
6.81086
14
10.56312
9.89864
9.58965
9.29498
9.01384
14
7.36669
6.00207
15
11.11839
10.37966
10.03758
9.71225
9.40267
15
8.06069
7.60608
6.14217
16
11.65230
11.23402
10.83777
10.46216
10.10590
9.76776
9.44665
16
8.85137
8.31256
7.82371
7.37916
6.97399
6.60388
6.26506
11.70719
12.15999
12.59329
10.86461
11.24607
11.60765
7.11963
7.24967
17
12.16567
11.27407
10.47726
10.11058
9.76322
17
9.12164
8.54363
8.02155
7.54879
6.72909
6.37286
11.68959
12.08532
10.82760
11.15812
10.43247
10.73471
18
12.65930
10.05909
18
9.37189
8.75563
8.20141
7.70162
6.83991
6.46742
19
13.13394
10.33560
19
9.60360
8.95011
8.36492
7.83929
7.36578
6.93797
6.55037
20
13.59033
13.00794
12.46221
11.95038
11.46992
11.01851
10.59401
20
9.81815
9.12855
8.51356
7.96333
746944
7.02475
6.62313
11.76408
12.04158
8.64869
8.77154
8.88322
8.98474
21
14.02916
13.40472
12.82115
12.27524
11.28498
10.83553
21
10.01680
9.29224
8.07507
7.56200
7.10155
6.68696
13.16300
13.48857
13.79864
14.09394
11.53520
11.77014
11.99074
12.19788
11.06124
11.27219
11.46033
11.65358
10.20074
10.37106
10.52876
6.74294
6.79206
6.83514
8.17574
7.64465
7.16951
7.22966
7.28288
22
14.45112
13.78442
12.58317
22
9.44243
14.85684
15.24696
15.62208
12.87504
13.15170
13.41393
12.30338
12.55036
12.78336
9.58021
9.70661
7.71843
7.78432
23
14.14777
23
8.26643
14.49548
14.82821
24
24
8.34814
25
25
10.67478
9.82258
9.07704
8.42174
7.84314
7.32998
6.87293
15.98277
16.32959
15.14661
15.45130
13.00317
13.21053
13.40616
13.59072
11.82578
14.37519
14.64303
14.89813
13.66250
12.39237
12.57500
7.37167
7.40856
26
26
10.80998
9.92897
9.16095
8.48806
7.89566
6.90608
13.89810
14.12142
14.33310
11.98671
12.13711
6.93515
6.96066
27
27
10.93516
10.02658
9.23722
8.54780
7.94255
28
16.66306
15.74287
12.74648
28
11.05108
10.11613
9.30657
8.60162
7.98442
7.44120
12.90749
9.36961
7.47009
7.49565
29
16.98371
16.02189
15.14107
12.27767
29
11.15841
10.19828
8.65011
8.02181
6.98304
30
17.29203
16.28889
15.37245
14.53375
13.76483
13.05868
12.40904
30
11.25778
10.27365
9.42691
8.69379
8.05518
7.00266
13.92909
14.08404
13.20063
13.33393
1345909
17.58849
15.59281
15.80268
16.00255
16.19290
14.72393
14.90420
12.53181
12.64656
11.34980
11.43500
8.08499
8.11159
7.51828
7.53830
7.55602
7.57170
7.58557
7.01988
7.03498
31
16.54439
31
10.34280
9.47901
8.73315
10.40624
10.46444
32
17.87355
16.78889
32
9.52638
8.76860
17.02286
9.56043
9.60857
8.80054
8.82932
33
18.14765
15.07507
14.23023
12.75379
33
11.51389
8.13535
7.04823
34
18.41120
17.24676
15.23703
14.36814
13.57661
12.85401
11.58693
11.65457
34
10,51784
815656
7.05985
35
18.66461
17.46101
16.37419
15.39055
14.49825
13.68696
12.94767
35
10.56682
9.64416
8.85524
8.17550
7.07005
40
19.79277
18.40158
17.15909
16.04612
15.04630
14.14553
13.33171
40
11.92461
10.75736
9.77905
8.95105
8.24378
7.63438
7.10504
45
20.72004
19.15635
17.77407
16.54773
15.45583
14.48023
13.60552
45
12.10840
10.88120
9.86281
9.00791
8.28252
7.66086
7.12322
50
21.48218
19.76201
18.25593
16.93152
15.76186
14.72452
13.80075
50
12.23348
10.96168
9.91481
9.04165
8.30450
7.67524
7.13266
Transcribed Image Text:Wind turbine capital investment analysis
Central Plains Power Company is considering an investment in wind farm technology to reduce its use of natural gas. Initial installation costs are expected to be $1,200 per kilowatt-hour of capacity. The wind turbine has a capacity of generating 2
megawatts per hour. A kilowatt-hour is 1,000 watts generated per hour and a megawatt hour is 1,000 kilowatts generated per hour.
Annual operating information related to the wind turbine project was developed as follows:
Wind capacity factor
25 %*
Operating cost per wind turbine megawatt hour
$10
Variable operating, fuel, and maintenance costs per natural gas megawatt hour
$95
Days per year
365
*A factor that measures the reduction from full capacity due to the variability of wind
a. Determine the initial investment cost of the wind turbine,
$ 2,400,000 v
b. Determine the annual cost savings from the wind turbine in replacing natural gas generation. Round to nearest whole dollar.
$ 372,300 v
c. Determine the net present value of the project assuming a 15-year life and 12% minimum rate of return. (Use the present value tables in Appendix A.)
X
Feedback
V Check My Work
Partially correct
Check My Work
Previous
Next
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education