B)

You are asked to evaluate the viability of a wind turbine project. A single, small-scale wind turbine costs $20,000 and can be sold as scrap after 20 years for $1,250. You would purchase a service contract for normal maintenance items at $500 per year. You can sell the energy created for $1000 a year, which is a bigger return than if you were to consume the energy yourself. Based on a NPV without discounting approach, is this small project viable? If inflation is 4%, at what initial cost does the project become viable if all other factors are unchanged? Now, instead of assuming you invest $20,000 to buy the turbine at the beginning of the project, you make a downpayment of 10% ($2,000) and finance the rest with a loan with a 3.1% interest rate with monthly payments. If the project is not viable, what initial cost would make it so under these conditions