Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Answer with good explanation will be upvoted. thanks For all the question below, assume that all dollar amounts have already been corrected for inflation. Thus,

image text in transcribed

Answer with good explanation will be upvoted. thanks

For all the question below, assume that all dollar amounts have already been corrected for inflation. Thus, any change in value of money over time is due only to opportunity cost (which is reflected in the discount rate). 1. For a proposed wind turbine, the following table presents the expected cash flows over life cycle. For that type of wind turbine, it has been observed that the service life is 11 years 25% of the time, 12 years 30% of the time, 13 years 40% of the time, and 14 years 5% of the time. Round off the expected value of the service life to the nearest whole number and consider this as the analysis period. Is this a good investment? Assume 4% discount rate. Description Construction cost Maintenance cost Operating cost Rehabilitation cost Amount $20M $0.5M $2M $1M at year 5 $2M at year 10 $3M $0.5M $8M Year incurred Year 0 Annually Annually Periodic, as indicated Salvage value of recyclable parts Cost of disposing of unsalvageable parts Revenue from the sales of electricity generated by the wind turbine End of the analysis period End of the analysis period Annually

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing A Practical Approach

Authors: Robyn Moroney, Fiona Campbell, Jane Hamilton

4th Edition

0730382648, 978-0730382645

More Books

Students also viewed these Accounting questions