San Diego Community Power (a CCA for SDG&E) offers a voluntary time of use pricing schedule...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
San Diego Community Power (a CCA for SDG&E) offers a voluntary "time of use" pricing schedule which charges $0.30/kWh during peak hours and $0.10/kWh in off-peak hours. Consumers who don't choose this plan are charged $0.25/kWh. By looking at consumers who went from the standard pricing to the time of use plan, they estimated that these households reduced their peak hour demand by 25%. but increased off-peak demand by 20%. (a) What is the price elasticity of peak hour demand from the starting point for the households that adopt this pricing plan? (2pts) (b) Remember that households opted in to this program. How is this elasticity estimate likely to compare to the elasticity for households that chose not to adopt the time of use program? (No explanation necessary) (1pt) i. Non-adopters will be more elastic ii. Non-adopters will have the same elasticity iii. Non-adopters will be less elastic iv. Not enough information (c) Based on the above, how will total household electricity usage change as a result of adopting the time of use plan? (No explanation necessary) (lpt) i. Increase ii. No change iii. Decrease iv. Not enough information Risky Investment (2pts) Consider two research and development opportunities with equal cost facing a geothermal engineering company. The expected return on investment and variance for both proposals is thought to follow a normal distribution. The first proposal has an expected return on investment ROI of 1 with a standard deviation of 0.5, while the second proposal has an expected ROI of 1 with an standard deviation of 0.25. Which proposal do you favor and why? Gain - Cost Cost The city of Carlsbad is considering installing several offshore wind turbines, in part to help generate power for its ocean water desalination plant. The wind turbines will last for many years but the city officials want to be able to say that the turbines paid for themselves before the next election in four years. The turbines will cost $1,000,000 this year (t-0), and will come online to produce annual cost savings of $350,000 next year, the following year, and the year after that (t-1.2.3). (6pts) (a) Suppose the interest rate is 5%, compute the net present value (NPV) of the investment with this discount rate. (2pts) (b) Compute the Benefit-Cost Ratio. (2pts) (e) Fearing a recession, suppose that the Federal Reserve lowers interest rates to 2%, so you are able to fund the project with a 2% discount rate. Recompute the benefit-cost ratio with this discount rate. (Assume that recession fears don't otherwise change your decision problem). (2pts) A natural gas peaker plant sells electricity to a local utility at a price of $100 per MWh, with a fixed cost of $100.000 and variable costs 50q+0.0005q². (q is measured in MWh). (a) What is the profit maximizing quantity of power to sell and how much profit will the generator make? (3pts) (b) Burning fossil fuel, the plant produces a lot of carbon dioxide. A new environmental regulation requires that for every Mcf of natural gas burned, an emission permit for 0.5 tons of CO₂ must be purchased. It takes approximately 7.4 Mef of natural gas to generate 1 MWh of electricity. and the cost of a 1ton CO₂ permit is $12. Rewrite the cost function from 5a to include the cost of the permit and solve for the profit maximizing quantity of power and profit. (3pts) San Diego Community Power (a CCA for SDG&E) offers a voluntary "time of use" pricing schedule which charges $0.30/kWh during peak hours and $0.10/kWh in off-peak hours. Consumers who don't choose this plan are charged $0.25/kWh. By looking at consumers who went from the standard pricing to the time of use plan, they estimated that these households reduced their peak hour demand by 25%. but increased off-peak demand by 20%. (a) What is the price elasticity of peak hour demand from the starting point for the households that adopt this pricing plan? (2pts) (b) Remember that households opted in to this program. How is this elasticity estimate likely to compare to the elasticity for households that chose not to adopt the time of use program? (No explanation necessary) (1pt) i. Non-adopters will be more elastic ii. Non-adopters will have the same elasticity iii. Non-adopters will be less elastic iv. Not enough information (c) Based on the above, how will total household electricity usage change as a result of adopting the time of use plan? (No explanation necessary) (lpt) i. Increase ii. No change iii. Decrease iv. Not enough information Risky Investment (2pts) Consider two research and development opportunities with equal cost facing a geothermal engineering company. The expected return on investment and variance for both proposals is thought to follow a normal distribution. The first proposal has an expected return on investment ROI of 1 with a standard deviation of 0.5, while the second proposal has an expected ROI of 1 with an standard deviation of 0.25. Which proposal do you favor and why? Gain - Cost Cost The city of Carlsbad is considering installing several offshore wind turbines, in part to help generate power for its ocean water desalination plant. The wind turbines will last for many years but the city officials want to be able to say that the turbines paid for themselves before the next election in four years. The turbines will cost $1,000,000 this year (t-0), and will come online to produce annual cost savings of $350,000 next year, the following year, and the year after that (t-1.2.3). (6pts) (a) Suppose the interest rate is 5%, compute the net present value (NPV) of the investment with this discount rate. (2pts) (b) Compute the Benefit-Cost Ratio. (2pts) (e) Fearing a recession, suppose that the Federal Reserve lowers interest rates to 2%, so you are able to fund the project with a 2% discount rate. Recompute the benefit-cost ratio with this discount rate. (Assume that recession fears don't otherwise change your decision problem). (2pts) A natural gas peaker plant sells electricity to a local utility at a price of $100 per MWh, with a fixed cost of $100.000 and variable costs 50q+0.0005q². (q is measured in MWh). (a) What is the profit maximizing quantity of power to sell and how much profit will the generator make? (3pts) (b) Burning fossil fuel, the plant produces a lot of carbon dioxide. A new environmental regulation requires that for every Mcf of natural gas burned, an emission permit for 0.5 tons of CO₂ must be purchased. It takes approximately 7.4 Mef of natural gas to generate 1 MWh of electricity. and the cost of a 1ton CO₂ permit is $12. Rewrite the cost function from 5a to include the cost of the permit and solve for the profit maximizing quantity of power and profit. (3pts)
Expert Answer:
Answer rating: 100% (QA)
The image contains multiple questions regarding economic concepts investments and project evaluations like net present value NPV calculations To provi... View the full answer
Related Book For
Managerial accounting
ISBN: 978-0471467854
1st edition
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin
Posted Date:
Students also viewed these economics questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Ilana Mathers, CPA, was hired by Interactive Computer Installations to prepare its financial statements for March 2017. Using all the ledger balances in the owner's records, Ilana put together the...
-
What is a chronological resume, and what are its advantages and disadvantages?
-
Sylvie Faivre, sales analyst for the Bouvre Cheese Company, had completed her analysis of one of the southern districts. The district was a candidate for consolidation because management believed...
-
In 2014, Javier Ramos decided to open seafood restaurants in California and Texas. Ramos claims that he was describing the crusted glaze applied to cooked seafood to his friend Ivan Murillo when...
-
For the office layout shown below and the accompanying trip and distance matrices, determine the total distance traveled per day. Find another layout that results in a lower total distance traveled...
-
Netflix estimates that North American demand for its streaming service has an elasticity of approximately -1.5. In 2022, 74 million subscribers generated revenues of just over $14 billion at an...
-
Exercise 3 used GSS data on the number of hours worked per week for a sample of 32 Latino adults. a. Calculate the mean number of hours worked per week. b. Compare the value of the mean with those...
-
Anxious to maintain sufficient reserves of the AXION company, Mr. DUPONT called on his distributors to repay the lines of credit that he had granted them. PRO SPORT PLUS ( PSP ), a general...
-
Taking the heating value of natural gas as 39.4 MJ per cubic metre, calculate the number of kilowatt hours of electricity that can be generated from one cubic metre of gas.
-
encompassing the Profit and Loss Account and Balance Sheet, for the year ending 2022-23, along with a disclosure of the accounting policies applied, for both Jekyll Ltd and Hyde Ltd. As an auditor...
-
A pipe is 2 m long. Take 343 m/s as the speed of sound in air. a. Determine the frequencies of the first three harmonics if the pipe is open closed at one end and open at the other. b. How many...
-
A sphere is propelled vertically from a position 3 meters above the ground with an initial speed of 10 meters per second, and the sole influence on it is gravity. The sphere weighs 0.15 kilograms. 1....
-
Denkey Kong swings from a 50 m long rope. He started at angle of 20" with the vertical. a) Determine the time required for Donkey Kong to reach equilibrium. b) Determine Donkey Kong's speed at...
-
1. Write the following sentences in ASL. He is my interesting friend. 1. 2. 3. 4. 5. 1. 2. 3. II. Assign each of the following objects a classifier. A big pizza 4. 5. WN. The man needs a new red car....
-
Given that all the choices are true, which one concludes the paragraph with a precise and detailed description that relates to the main topic of the essay? A. NO CHANGE B. Decades, X-ray C. Decades...
-
The following information is taken from the records of Cabot Cove Company. At the end of the year, Cabot Cove had only three jobs in process. Selected figures for these three jobs are: Cabot Cove...
-
Browse the Web site at www.microsoft.com/mscorp/mission/ to read about Microsoft's goals (corporate mission). For an additional sample of a for-profit firm's goals, browse the Web sites of General...
-
Consider a professional sports team such as the Miami Heat, the Chicago Cubs, or the Colorado Avalanche. The team comprises many individuals, each of whom is a gifted athlete and is well paid. As a...
-
To test \(H_{0}: \sigma=50\) versus \(H_{1}: \sigma <50\), a random sample of size \(n=24\) is obtained from a population that is known to be normally distributed. (a) If the sample standard...
-
In Example 2 from Section 10.3, the quality-control engineer for M\&MMars tested whether the mean weight of fun-size Snickers was 20.1 grams. Suppose that the standard deviation of the weight of the...
-
(a) Determine the critical values for a right-tailed test of a standard population deviation with 18 degrees of freedom at \(\alpha=0.1\) level of significance. (b) Determine the critical values for...
Study smarter with the SolutionInn App