The table below summarises the financial information for construction of a solar power plant in Western...

 

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The table below summarises the financial information for construction of a solar power plant in Western Australia (Plan A). Land price Installation cost Cost of panels and equipment $6,000,000 Maintenance cost per year Fixed electricity price Plan A Service life $200,000 End of life value Electricity production per year 2,000,000 kWh $1,000,000 $150,000 $0.6 per kWh 50 years $3,000,000 Alternatively, we can use higher quality panels and equipment to increase annual electricity production (Plan B). This increases the cost of panels and equipment to $8,000,000. The annual maintenance costs are also going to be decreased to $70,000. All of the other parameters remain unchanged. What is the minimum annual electricity production which results in the same benefit to cost ratio for the two plans? Assume an interest rate of 10%. The table below summarises the financial information for construction of a solar power plant in Western Australia (Plan A). Land price Installation cost Cost of panels and equipment $6,000,000 Maintenance cost per year Fixed electricity price Plan A Service life $200,000 End of life value Electricity production per year 2,000,000 kWh $1,000,000 $150,000 $0.6 per kWh 50 years $3,000,000 Alternatively, we can use higher quality panels and equipment to increase annual electricity production (Plan B). This increases the cost of panels and equipment to $8,000,000. The annual maintenance costs are also going to be decreased to $70,000. All of the other parameters remain unchanged. What is the minimum annual electricity production which results in the same benefit to cost ratio for the two plans? Assume an interest rate of 10%.

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