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1 ) Complete the cash flow diagram of the following planning figure. You are currently employed as a lead mechanical engineer at the Big Bend
1 ) Complete the cash flow diagram of the following planning figure.
You are currently employed as a lead mechanical engineer at the Big Bend Power Station in Florida. Your plant is one of the largest coal plants in the state with a capacity of 1, 700 MWH. Recent flooding in the state, preceded by heat waves and drought, have prompted lawmakers to consider a carbon tax to limit CO2 emissions. Last week there was a demonstration at your plant calling for its immediate closure. Plant management is getting worried about the future of the plant. Even if the new carbon tax is not implemented, should there be changes at Big Bend? Would a state-of-the-art CCGT be a wise investment? How will the plant handle peak power demands from the extreme heat? You thought working in Florida would be your dream job, the warm weather, golf courses, beaches, etc. You never thought you'd be watching protesters out your window and now you are dealing with too much work related stress! Numerous plant managers trust your judgment and today several individually asked you to do an economic analysis considering the proposed carbon fee and as well as the possibility of new natural gas CCGT plant. Manager A requests an analysis of the net present value of the coal plant with and without the carbon fee assuming a 7% interest rate and 10 years left in the plant's useful life. Assume you purchase fuel, you sell your electricity and pay the carbon fee at the end of the year
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