A solar sea power plant (SSPP) is being considered in a North American location known for its

Question:

A solar sea power plant (SSPP) is being considered in a North American location known for its high temperature ocean surface and its much lower ocean temperature 100 meters below the surface. Power can be produced based on this temperature differential. With high costs of fossil fuels, this particular SSPP may be economically attractive to investors. For an initial investment of $100 million, annual net revenues are estimated to be $15 million in years 1–5 and $20 million in years 6–20. Assume no residual market value for the SSPP.
a. What is the simple payback period for the SSPP?
b. What is the discounted payback period when the MARR is 6% per year?
c. Would you recommend investing in this project?

MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other... Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...

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