An ethanol processing facility costs $40,000 to construct and will last 6 years (it is constructed...
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An ethanol processing facility costs $40,000 to construct and will last 6 years (it is constructed in year 0 and runs from year I through year 6). It produces 3,000 barrels of ethanol per year and can charge a price of $6 per barrel. If the interest rate is 9%, what is the net present value of this facility? A different ethanol processing facility costs $700.000 to construct but will instead last forever. Every year (starting the year after construction), it produces 10,000 barrels of ethanol and can charge a price of $6 per barrel. At what interest rate would an investor be indifferent between constructing the facility and simply keeping the money? An ethanol processing facility costs $40,000 to construct and will last 6 years (it is constructed in year 0 and runs from year I through year 6). It produces 3,000 barrels of ethanol per year and can charge a price of $6 per barrel. If the interest rate is 9%, what is the net present value of this facility? A different ethanol processing facility costs $700.000 to construct but will instead last forever. Every year (starting the year after construction), it produces 10,000 barrels of ethanol and can charge a price of $6 per barrel. At what interest rate would an investor be indifferent between constructing the facility and simply keeping the money?
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For the first facility we can calculate the net present value NPV using the formula NPV Initial Cost ... View the full answer
Related Book For
Engineering Economic Analysis
ISBN: 9780195168075
9th Edition
Authors: Donald Newnan, Ted Eschanbach, Jerome Lavelle
Posted Date:
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