You have installed a field of wind turbines with a total initial investment of 42,000,000TL, which includes the cost of all equipment purchases, installation, additional fixed costs, and working capital. The field has an expected lifetime of 20 years and is expected to generate 12,300 MWh/year of electricity under normal conditions. Annual operating, maintenance and labor costs are estimated to be 2,200,000 TL, all of which are tax deductable. Assume that your initial investment of 42 million TL includes 35,000,000 of fixed capital investment that will depreciate over 20 years according to the straight-line depreciation method. You will need to pay 23% corporate tax on your taxable income. Salvage values are assumed to be zero. F'r the baseline solution, you can assume 100% equity Önancing. Assume that you can sell electricity at an (expected) price of 0.75 TL per kW/h. Your company uses a real (ináation - adjusted) MARR of 6%. Use a spreadsheet for your calculations and return it as a separate file with your answers. (a) Find the Net Present Value of this investment. (b) Compute the Levelized Cost of Electricity (LCOE) for your investment. (c) Find the Internal Rate of Return (IRR) for your investment. (d) Find the breakeven period for your investment at the expected sale price.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Question
You have installed a field of wind turbines with a total initial investment of 42,000,000TL, which includes the cost of all
equipment purchases, installation, additional fixed costs, and working capital. The field has an expected lifetime of 20
years and is expected to generate 12,300 MWh/year of electricity under normal conditions. Annual operating,
maintenance and labor costs are estimated to be 2,200,000 TL, all of which are tax deductable. Assume that your initial
investment of 42 million TL includes 35,000,000 of fixed capital investment that will depreciate over 20 years according
to the straight-line depreciation method. You will need to pay 23% corporate tax on your taxable income. Salvage values
are assumed to be zero. F'r the baseline solution, you can assume 100% equity Önancing. Assume that you can sell
electricity at an (expected) price of 0.75 TL per kW/h. Your company uses a real (ináation - adjusted) MARR of 6%. Use
a spreadsheet for your calculations and return it as a separate file with your answers. (a) Find the Net Present Value of
this investment. (b) Compute the Levelized Cost of Electricity (LCOE) for your investment. (c) Find the Internal Rate of
Return (IRR) for your investment. (d) Find the breakeven period for your investment at the expected sale price.
Transcribed Image Text:You have installed a field of wind turbines with a total initial investment of 42,000,000TL, which includes the cost of all equipment purchases, installation, additional fixed costs, and working capital. The field has an expected lifetime of 20 years and is expected to generate 12,300 MWh/year of electricity under normal conditions. Annual operating, maintenance and labor costs are estimated to be 2,200,000 TL, all of which are tax deductable. Assume that your initial investment of 42 million TL includes 35,000,000 of fixed capital investment that will depreciate over 20 years according to the straight-line depreciation method. You will need to pay 23% corporate tax on your taxable income. Salvage values are assumed to be zero. F'r the baseline solution, you can assume 100% equity Önancing. Assume that you can sell electricity at an (expected) price of 0.75 TL per kW/h. Your company uses a real (ináation - adjusted) MARR of 6%. Use a spreadsheet for your calculations and return it as a separate file with your answers. (a) Find the Net Present Value of this investment. (b) Compute the Levelized Cost of Electricity (LCOE) for your investment. (c) Find the Internal Rate of Return (IRR) for your investment. (d) Find the breakeven period for your investment at the expected sale price.
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