Banedanmiark must choose between two types of transformers, A and B. Data for these are listed in Table 1. 40 40 Scrap value (DKK Idle loss (MWh/year) Onerating loss Mwhfyear 300 1400 450 1,100 The price of electricity is set to 0.40 DKK/kWh, and the discount rate is set to 5% per year Part I: QUESTION 1 Which of the two types would you recommend that Banedanmark acquire? QUESTION 2: What value should the discount rate be for the two investments to be equally attractive? QUESTION 3: Assume that from the answer to question 1, Banedanmark proposes to choose type B. It is possible for this type to add a short-circuit test for 0.6 mlon DKK, which will increase the life by 10%, i.e. from 40 to 44 years. Would you recommend that Banedanmar k acquire the short-circuit test? What value should the discount rate be for the two investments to be equally attractive? QUESTION 3: Assume that fram the answer to question 1, Banedanmark praposes to choase type B. It is possible for this type to add a short-circuit test for 0.6 million DKK, which will increase the life by 10%, ie, from 40 to 44 vears Would you recommend that Banedanmark acquire the short-circuit test? Part II Sketch graphs of the net present value, NP, of the two investments as a function of the discount rate, i. Can the answer to qston b found, based on the two graphs? Part Ill Simulate the effect of the Price change if it will follow the following pattern for Type A.bu.ld the 95% confidence interval Type A (Price (milion DKK-1.25/20% probability l; Price (rni lion DKK)-2.25140 % probability): Price (million DKK)-3 [25 % probability: Price (million DKK)-3S(15 % probability) Banedanmiark must choose between two types of transformers, A and B. Data for these are listed in Table 1. 40 40 Scrap value (DKK Idle loss (MWh/year) Onerating loss Mwhfyear 300 1400 450 1,100 The price of electricity is set to 0.40 DKK/kWh, and the discount rate is set to 5% per year Part I: QUESTION 1 Which of the two types would you recommend that Banedanmark acquire? QUESTION 2: What value should the discount rate be for the two investments to be equally attractive? QUESTION 3: Assume that from the answer to question 1, Banedanmark proposes to choose type B. It is possible for this type to add a short-circuit test for 0.6 mlon DKK, which will increase the life by 10%, i.e. from 40 to 44 years. Would you recommend that Banedanmar k acquire the short-circuit test? What value should the discount rate be for the two investments to be equally attractive? QUESTION 3: Assume that fram the answer to question 1, Banedanmark praposes to choase type B. It is possible for this type to add a short-circuit test for 0.6 million DKK, which will increase the life by 10%, ie, from 40 to 44 vears Would you recommend that Banedanmark acquire the short-circuit test? Part II Sketch graphs of the net present value, NP, of the two investments as a function of the discount rate, i. Can the answer to qston b found, based on the two graphs? Part Ill Simulate the effect of the Price change if it will follow the following pattern for Type A.bu.ld the 95% confidence interval Type A (Price (milion DKK-1.25/20% probability l; Price (rni lion DKK)-2.25140 % probability): Price (million DKK)-3 [25 % probability: Price (million DKK)-3S(15 % probability)
