Electritying Visioneering Technologies (EVT) is a compary that foouses on electricty technology investments. The recent developments in electrification of the transportation sector have shown that opportunities in the supply of electricity to electric vehicles (EVs) powered by renewable electricity are core to addressing pollusion reduction, efficient transportation and energy security challenges. EVT must identify two apportunities in the electrification value chain. They include installing electric vehicle charging stations and renewable energy production. You have been assigned by EVT to perform an economic analysis of these two opportunites and advise EVT which is the economically viable option(s). After conducting basic research, you comple the following information: - Project ife: 10 years - Base year. 2024 (assume plants will be ready for operation in 2025 onwards). - Depreciation: Straight line over project life to zero (assume no scrap value). - Electricity cost in South Africa is estimated to average R2.82/WWh in 2022. An increase of about 20% is anticipabed in 2023 . Thereafter it is assumed to grow at 8% (6\%) maximum inflation plus 2% ) for the project's ifle. - The electric vehicle charge rate in South Africa is estimated to average Rs.goikWh in 2022. Assume it increases at 2% per annum throughout the life of the project. - Assume al electricity is sold at the 4-5er prides: Charging electricty stafon for light vehicle cars rated at 24WW for 20 minutes for one car. Approximately 15 cars per day in this calegory wil be servibed. Charging electricty staton for medium cars rated at of 50WW for 40 minutes for one car. Approximately 12 cars per day in this calegory wil be servioed. Charging electricty station for high-powered cars rated at of 90kW for 60 minules for one car. Appeovimately 4 cars per day in this category will be serviced. The remainder of the electricity will be sold to Eskom. - Operation costs increase at 3\% for the duration of the project to cover inflation and unforeseen costs increase. - Company tax: 28\% (ignore other taves) - (EVT has no debt and its cost of equity is 14%. It can borrow at 8%. - The table below gives data of the leading electricity plants and technologies EVT has picked for evaluation in the 10 year period project life. Nobe: 1. Establish this value based on Note 3 for your calculations. 2. Two electrio vehicle charging stations, each based on 10 charging points, are needed to meet the electricity requirements of eiectrio vehicle charging stations' oulput capacily specifed below. 3. Output capacity is based on the following charging assumptions: a Charging electricity station for light vehicle cars rated at 24kW for 20 minutes for one car. Approoumately 15 cars per day in this category will be serviced. a Charging electricity stafion for medium cars rated at s0kW for 40 minutes for one car. Approximately 12 cars per day in this category will be serviced. - Charging electricity stafion for high power cars rated at 90kW for 60 minutes for one car. Approvimately 4 cars per day in this category will be serviced. - 345 days per year selected to allow for maintenance, unforeseen breakdowans and electricity avallability. EVT management has asked you to perform the proftability analysis and make recommendafions which address the following questions: 3.1. What is the WACC suitable for EVT if it decides to borrow up to the equivalent of 25% of its current equity? The proceeds would be used to buy back shares of the company. [6] 3.2. Discuss major tactors that you would consider when making a capital structure decision specifio to these EVT projects. [3] 3.3. What are the projects' estimated NPVs for the following options? [16] a. DC Fast Charging Station, assuming electridty is bought from Eskom. [4] b. Hydropower plant, assuming that all electricity produced is sold to Eskom only. [4] c. Integrated business based on sales of 4-5er prices. [3] 3.4. What is the payback period for integrated business? [2] 3.5. Based on the NPV calculations and payback above, what are your recommendafons? Justify your answer. [3] Electritying Visioneering Technologies (EVT) is a compary that foouses on electricty technology investments. The recent developments in electrification of the transportation sector have shown that opportunities in the supply of electricity to electric vehicles (EVs) powered by renewable electricity are core to addressing pollusion reduction, efficient transportation and energy security challenges. EVT must identify two apportunities in the electrification value chain. They include installing electric vehicle charging stations and renewable energy production. You have been assigned by EVT to perform an economic analysis of these two opportunites and advise EVT which is the economically viable option(s). After conducting basic research, you comple the following information: - Project ife: 10 years - Base year. 2024 (assume plants will be ready for operation in 2025 onwards). - Depreciation: Straight line over project life to zero (assume no scrap value). - Electricity cost in South Africa is estimated to average R2.82/WWh in 2022. An increase of about 20% is anticipabed in 2023 . Thereafter it is assumed to grow at 8% (6\%) maximum inflation plus 2% ) for the project's ifle. - The electric vehicle charge rate in South Africa is estimated to average Rs.goikWh in 2022. Assume it increases at 2% per annum throughout the life of the project. - Assume al electricity is sold at the 4-5er prides: Charging electricty stafon for light vehicle cars rated at 24WW for 20 minutes for one car. Approximately 15 cars per day in this calegory wil be servibed. Charging electricty staton for medium cars rated at of 50WW for 40 minutes for one car. Approximately 12 cars per day in this calegory wil be servioed. Charging electricty station for high-powered cars rated at of 90kW for 60 minules for one car. Appeovimately 4 cars per day in this category will be serviced. The remainder of the electricity will be sold to Eskom. - Operation costs increase at 3\% for the duration of the project to cover inflation and unforeseen costs increase. - Company tax: 28\% (ignore other taves) - (EVT has no debt and its cost of equity is 14%. It can borrow at 8%. - The table below gives data of the leading electricity plants and technologies EVT has picked for evaluation in the 10 year period project life. Nobe: 1. Establish this value based on Note 3 for your calculations. 2. Two electrio vehicle charging stations, each based on 10 charging points, are needed to meet the electricity requirements of eiectrio vehicle charging stations' oulput capacily specifed below. 3. Output capacity is based on the following charging assumptions: a Charging electricity station for light vehicle cars rated at 24kW for 20 minutes for one car. Approoumately 15 cars per day in this category will be serviced. a Charging electricity stafion for medium cars rated at s0kW for 40 minutes for one car. Approximately 12 cars per day in this category will be serviced. - Charging electricity stafion for high power cars rated at 90kW for 60 minutes for one car. Approvimately 4 cars per day in this category will be serviced. - 345 days per year selected to allow for maintenance, unforeseen breakdowans and electricity avallability. EVT management has asked you to perform the proftability analysis and make recommendafions which address the following questions: 3.1. What is the WACC suitable for EVT if it decides to borrow up to the equivalent of 25% of its current equity? The proceeds would be used to buy back shares of the company. [6] 3.2. Discuss major tactors that you would consider when making a capital structure decision specifio to these EVT projects. [3] 3.3. What are the projects' estimated NPVs for the following options? [16] a. DC Fast Charging Station, assuming electridty is bought from Eskom. [4] b. Hydropower plant, assuming that all electricity produced is sold to Eskom only. [4] c. Integrated business based on sales of 4-5er prices. [3] 3.4. What is the payback period for integrated business? [2] 3.5. Based on the NPV calculations and payback above, what are your recommendafons? Justify your answer. [3]