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A hydroelectric plant with a life of 60 years cost $ 10 million to build while a comparable wind power facility with a lifetime of

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A hydroelectric plant with a life of 60 years cost $ 10 million to build while a comparable wind power facility with a lifetime of 25 years cost $ 2 million to build. The hydro facility generates annual net benefits of $ 0.55 million per year (starting at the end of year 1) while the wind power facility generates $ 0.25 million in net benefits per year (starting at the end of year 1). a. Should the hydroelectric or wind power facility be built today if only one or the other could be built? Determine the sensitivity of results to varying the discount rate between 2 %, 6.5 % and 10%. (8) b. Should the hydroelectric or wind power facility be built today if either could be built? Determine the sensitivity of results to varying the discount rate between 2 %, 6.5 % and 10%. (3) c. What is the critical discount rate at which we are indifferent of building either the hydro plant or the wind power facility? (4) d. What other factors come into play for making the decision in which technology to invest now? (5) A hydroelectric plant with a life of 60 years cost $ 10 million to build while a comparable wind power facility with a lifetime of 25 years cost $ 2 million to build. The hydro facility generates annual net benefits of $ 0.55 million per year (starting at the end of year 1) while the wind power facility generates $ 0.25 million in net benefits per year (starting at the end of year 1). a. Should the hydroelectric or wind power facility be built today if only one or the other could be built? Determine the sensitivity of results to varying the discount rate between 2 %, 6.5 % and 10%. (8) b. Should the hydroelectric or wind power facility be built today if either could be built? Determine the sensitivity of results to varying the discount rate between 2 %, 6.5 % and 10%. (3) c. What is the critical discount rate at which we are indifferent of building either the hydro plant or the wind power facility? (4) d. What other factors come into play for making the decision in which technology to invest now

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