Question (4): A power plant is being considered in the dead sea location. For an initial investment of $X1 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 plant. a. What is the simple payback period for the plant? b. What is the discounted payback period when the MARR is x2% per year? c. Using an equivalency technique (FW, PW, or AW), MARR is x2% per year, would you recommend investing in this project? X1 = 80 X2 = 18% *Do not use excel to solve the problem, use the equations and explain each step in details. *Draw a cash flow diagram.

Question (4): A power plant is being considered in the dead sea location. For an initial investment of $X1 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 plant. a. What is the simple payback period for the plant? b. What is the discounted payback period when the MARR is x2% per year? c. Using an equivalency technique (FW, PW, or AW), MARR is x2% per year, would you recommend investing in this project? X1 = 80 X2 = 18% Do not use excel to solve the problem, use the equations and explain each step in details. Draw a cash flow diagram.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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