An integrated, combined cycle power plant produces 295 MW of electricity by gasifying coal. The capital investment for the plant is $640 million, spread evenly over two years. The operating life of the plant is expected to be 19 years. Additionally, the plant will operate at full capacity 72% of the time (downtime is 28% of any given year). The MARR is 8% per year. a. If this plant will make a profit of two cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant? Is it a low-risk venture? b. What is the IRR for the plant? Is it profitable?

An integrated, combined cycle power plant produces 295 MW of electricity by gasifying coal. The capital investment for the plant is $640 million, spread evenly over two years. The operating life of the plant is expected to be 19 years. Additionally, the plant will operate at full capacity 72% of the time downtime is 28% of any given year The MARR is 8% per year. a. If this plant will make a profit of two cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant? Is it a low-risk venture? b. What is the IRR for the plant? Is it profitable