An integrated, combined cycle power plant produces 280 MW of electricity by gasifying coal. The capital...

 

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An integrated, combined cycle power plant produces 280 MW of electricity by gasifying coal. The capital investment for the plant is $690 million, spread evenly over two years. The operating life of the plant is expected to be 15 years. Additionally, the plant will operate at full capacity 75 % of the time (downtime is 25 % of any given year). The MARR is 6% per year. a. If this plant will make a profit of three cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant? Is it a low-risk venture? b. What is the IRR for the plant? Is it profitable? An integrated, combined cycle power plant produces 280 MW of electricity by gasifying coal. The capital investment for the plant is $690 million, spread evenly over two years. The operating life of the plant is expected to be 15 years. Additionally, the plant will operate at full capacity 75 % of the time (downtime is 25 % of any given year). The MARR is 6% per year. a. If this plant will make a profit of three cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant? Is it a low-risk venture? b. What is the IRR for the plant? Is it profitable?

Answer rating: 100% (QA)

Answer a Payback period 125 years A... View the full answer