Expected Net Present Value problems (35 points)

Imagine you are analyzing an energy production project, there are two alternatives: build- ing a new natural gas energy plant or building a new solar energy farm.

For the natural gas plant: it requires an initial investment of $6,000,000, has fixed pro- duction cost of $50 per MWh, the amount of energy produced is constant and set at 200 MWh per day. It also produces 30,000 tons of CO2 per year at a cost of $5 per ton. The life expectancy of this plant is 30 years.

For the solar farm: it requires an initial investment of $12,000,000, has a variable cost of $10 per MWh, the amount of energy produced depends on the daily weather, with a 50% probability the day will be sunny and will produce 500MWh, with a 30% probability the day will be cloudy and will produce 250MWh and with a 20% probability the day will be stormy and will produce zero MWh, however, the plant has a contract were they are committed to supply 500MWh every day and must buy it at the wholesale market at a price of $100 per MWh if they can't provide the required amount on it owns. This farm has no environmental cost. Finally the life expectancy of the farm is 20 years.

The city they plan to provide electricity values each MWh at $80 and they will pay this amount to the producing plant.

You can aggregate all the (expected) yearly cost at the start of each year and aggregate all the (expected) yearly benefits at the end of each year. The interest rate is 5% and there is no need to consider daily interest rates (i.e. you may aggregate inside each year ignoring the value of time).

With all this information, the city council ask you to: (a) (10 pts) Calculate the NPV for the natural gas plant.

(b) (10 pts) Calculate the expected NPV for the solar farm.

(c) (5 pts) Only using the values from (a) and (b), compare the two options and give a

recommendation to the city.

d) (10 pts) Do you think your recommendation in (c) is appropriate? Why or why not? If you were able to make changes as to how you use the values found in part (a) and (b) to give a more complete recommendation, how would you do it?

Part II. Molar Enthalpy of Dissolution of a Salt Mass of water 75.41g Mass of NH.NO, 3.02 19.2"C\fABC Partnership Statement of Liquidation December 31, 2020 Non- Carla. Anita. Banana, Carla. Particulars Cash cash Liabilities Loan Capital Capital Capital Assets GENERAL JOURNAL POST DATE PARTICULARS DEBIT CREDIT REF 2 3 60 / M A W N -Question 1 (1 point) Silver's Gym ordered $10,000 worth of fitness equipment from Sports Equipment, Inc. If Silver's fails to pay for the equipment, Sports Equipment, Inc. can enforce the contract: O Only if there is a writing signed by both Silver's and Sports Equipment, Inc. O Even if neither party has signed the contract O As long as there is a writing signed by Silver's O As long as there is a writing signed by Sports Equipment, Inc. Save Question 2 (1 point) If both parties to a contract are mistaken regarding market conditions, such as the likely price of gasoline in the future, then ordinarily they: O Are required to renegotiate the contract. O Are stuck with the contract. Have no contract. O Are both discharged from further performance of the contract. Save Question 3 (1 point) National Widget, Inc. and Widgets-For-A-Buck entered into a contract requiring National Widget to supply widgets worth $10,000 over a 6 month period. The only written evidence of the contract is a memo in the file of Widgets-For-A-Buck. The memo states "Ordered 10,000 widgets from NW. Delivery 6 mon." The memo is signed by Waldo Walters, the president of Widgets-For-A-Buck. Under the Statute of Frauds, the contract is: 1 of 13 3/24/11 8:51 AM O Not enforceable by either party. O Enforceable by either party. O Enforceable by National Widget, Inc. only. O Enforceable by Widgets-For-A-Buck only.Question 25 (1 point) Listen Cole Contracting agreed to build an outbuilding for Diego in exchange for $100,000. The outbuilding was to be built during May and June and Diego was to pay by July 15. The construction was completed on schedule. Because they were were experiencing some financial difficulties, Cole Contracting had verbally assigned their contractual rights to Putong Lumber Supply in late May. Cole Contracting had provided a letter to Diego to let him know about the arrangement. Diego, unhappy about the quality of the construction, refused to pay and took Cole Contracting to court. Which of the following statements is true? ()a) This is an example of statutory assignment of rights. If Putong Lumber wants to enforce their rights they can sue Diego without involving Cole Contracting. () b) This is an example of equitable assignment of rights. If Putong Lumber wants to enforce their rights they'll have to sue both Diego and Cole Contracting. ()d) This is an example of equitable assignment of rights. If Putong Lumber wants to enforce their rights they can sue Diego without involving Cole Contracting. ()d) This is an example of statutory assignment of rights. If Putong Lumber wants to enforce their rights they'll have to sue both Diego and Cole Contracting. Question 26 (1 point) Listen An owner specified a certain roofing material for its project after being persuaded by its manufacturer that it was "the best material to use for this situation". A subcontractor on the project installed this roofing material carefully in accordance with the manufacturer's instructions. There was no roofing guarantee in the contract with the general contractor. The roof leaked two years after the work was done because of the inferior quality of the roofing material. Against whom should the owner claim? (a) the product salesman b) the product manufacturer O c) the subcontractor O d) the general contractor