Complete a cash flow analysis assuming a twenty year life of a biofuel plant with 40 million gal gasoline equivalent/yr capacity. Biomass feedstock is 47wt% carbon on a dry weight basis. Total capital investment upfront in year 0 is $400 million and 84% of the TCI is accounted for by the FCI. Annual costs include biomass feedstock, whose price varies over the 20 years ($75/ dry ton in years 1 to 5, $100/ dry ton in years 5 to 15, $120/dry ton in years 15 to 20) and additional operating expenses of $1/gal gasoline equivalent (this will include utilities, labor, chem&cat etc.). Biomass feedstock yields 70 gallons of gasoline equivalent per dry ton of biomass. Federal tax rate is 21% and fixed capital is depreciated using straight line depreciation.

a. Find average biofuel price needed for an IRR of 10% and 20% (5 pt)

b. Assume the capital cost is a subsidized loan at 2% interest to be paid back over the life of the plant. Under these conditions, what is the biofuel price required for an IRR of 10%? (3 pt)

c. Assume the biofuel market price is $3/gallon of gasoline equivalent, 1/4 of the carbon in the feedstock biomass goes to CO2 (hint CO2 is heavier than carbon), and it costs $30/ton of CO2 to capture and store that CO2 in geological reservoirs. What is the breakeven CO2 storage price at a rate of return of 15%?(4 pt)