the university of caifornia at san diego is considering plant to build a 8 megaw
ID: 2741445 • Letter: T
Question
the university of caifornia at san diego is considering plant to build a 8 megawatt cogeneration plant to provide for part of its power needs, the cost of the plant is expected to be $41 million . the university consumes 55000 megawatt hours per year at a cost of $120 per megawatt hour (a) if the university will be able to produce power at half the cost that it now pays what rate of return will it make on its investment for an expected power plant life of 30 years ? (b) if in addition the university can sell an avarage of 12000 megawatthours per year back to the utility at $90 per megawatt hour , what rate of return will it make?
ASUME MARR =20% AND SELECT ALTERNATIVES USE EXCEL SPREADSHEETS TO SOLVE THE PROBLEM (SUBJECT engineering economy) ANS (a) 7% (b)10.08%
Explanation / Answer
Solution.
A.
0
= -41,000,000 + 55,000 (60) (P/A,i%,30)
( Differnces is due to fraction error )
B.
0 = -41,000,000 + [55,000(60) + 12,000(90)](P/A,i%,30)
0 = -41,000,000 + (4,380,000)(P/A,i%,30)
( Differnces is due to fraction error )
Year Cash Flow Table Value PV 0 (41,000,000) 1.0000 (41,000,000.00) 1 3,300,000 0.9340 3,082,200.00 2 3,300,000 0.8730 2,880,900.00 3 3,300,000 0.8160 2,692,800.00 4 3,300,000 0.7620 2,514,600.00 5 3,300,000 0.7120 2,349,600.00 6 3,300,000 0.6660 2,197,800.00 7 3,300,000 0.6220 2,052,600.00 8 3,300,000 0.5820 1,920,600.00 9 3,300,000 0.5430 1,791,900.00 10 3,300,000 0.5080 1,676,400.00 11 3,300,000 0.4750 1,567,500.00 12 3,300,000 0.4440 1,465,200.00 13 3,300,000 0.4140 1,366,200.00 14 3,300,000 0.3870 1,277,100.00 15 3,300,000 0.3620 1,194,600.00 16 3,300,000 0.3380 1,115,400.00 17 3,300,000 0.3160 1,042,800.00 18 3,300,000 0.2950 973,500.00 19 3,300,000 0.2760 910,800.00 20 3,300,000 0.2580 851,400.00 21 3,300,000 0.2410 795,300.00 22 3,300,000 0.2250 742,500.00 23 3,300,000 0.2100 693,000.00 24 3,300,000 0.1970 650,100.00 25 3,300,000 0.1840 607,200.00 26 3,300,000 0.1720 567,600.00 27 3,300,000 0.1600 528,000.00 28 3,300,000 0.1500 495,000.00 29 3,300,000 0.1400 462,000.00 30 3,300,000 0.1310 432,300.00 PV 40,896,900.00Related Questions
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