It is due tomorrow at 5pm. Someone please help me out.

Fall 2016 - EBF 304W Memorandum 3 Due: 5:00pm on Tuesday, November 1st (via ANGEL) 50 points Instructions: Utilize the provided template for formatting your memo; do not change any of the margins, line spacing, or fonts. Completely answer the following question(s) in no more than 2 pages. You should utilize figures or tables if they aid in comprehension of your response. Graphs or tables must be appropriately captioned and clear enough that I can understand them (this means labeling axes, variables, and so forth). Your memo must be submitted in a single electronic file in pdf file format. Late assignments will lose 10% per late day. Keep in mind that this assignment continues on with everything you know from the Memo 1 and Memo 2 assignments unless specifically contradicted below. Question 1 (50 points): The reason your company is exploring options to build a power plant in the Philadelphia area is that they control large amounts of Pennsylvania based natural gas reserves. Since prices are currently so low, the company has decided to invest in secondary commodities produced from natural gas like electrical power and plastics to increase their profit margins. Your company is making a decision as to whether to go forward with one of two proposed natural gas pipeline construction projects (or none at all). The first option known as \"PennEast\" would link the north central Pennsylvania Marcellus Shale fields with the Philadelphia via a direct northerly route (114 miles). The second option, \"Atlantic Sunrise\Fall 2016 - EBF 304W Memorandum 2 Due: 5:00pm on Thursday, October 6th 2016 (via ANGEL) 50 points Instructions: Utilize the provided template for formatting your memo; do not change any of the margins, line spacing, or fonts. Completely answer the following question(s) in no more than 2 pages. You should utilize figures or tables if they aid in comprehension of your response. Graphs or tables must be appropriately captioned and clear enough that I can understand them (this means labeling axes, variables, and so forth). Your memo must be submitted in a single electronic file in pdf file format. Late assignments will lose 10% per late day (e.g., late day 1 begins at 5:01pm on the due date and ends at 5:00pm on the following day). Keep in mind that this assignment continues on with everything you know from the Memo 1 assignment unless specifically contradicted below. Question 1 (50 points): You have just received three new important pieces of information on the power plant options available to your company. First, the manufacturers have updated their purchase prices, And, you now know that the fuel efficiency of the power plants is not constant, but degrades over time until, eventually, an expensive overhaul is required that returns the plant to its original operating conditions. The rate of decrease of the fuel efficiency is given in the figures below, along with the costs of the overhaul. Evaluate how this would change your decision regarding which turbine to buy. Parameter New Purchase Price Fuel Efficiency Degradation Rate Rolls Royce Simple Cycle Generator General Electric Combined Cycle Generator $485 million $445 million 0.4 million Btu/MWh 0.1 million Btu/MWh PK##########!#.#########[Content_Types].xml #(########################################################################### ################################################################################ ################################################################################ ################################################################################ ################################################################################ ###########################################################################UN 0###q)#B)## |U##x#B#Ls #*d1M#N@##Ib# #F#i#{S}#1 O`#9F`;!,#JRt+BD-#F#0>6n.`-6s5]#8': %w9q#,U#3%##.>bw##>#RnY#9S&o#####PK##########! #U0####L######_rels/.rels #(########################################################################### ################################################################################ ################################################################################ ################################################################################ ################################################################################ #############################################################N0 HCnH#LH!T#$#$@#Jc? 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PennEast can down within the $270000 to $460000 per miles while Atlantic Sunrise can down by $200000 to 250000 per mile. The pipeline project has 20 years of life. But, gas prices are uncertain that reduce the stability of its lifecycle in the market. The previous year gas price was approximate $2, $4 and $8 MMBtu while current years Marcellus Field Gas Production was minimum 30000, mode 50000 and maximum 65000 millions of BTUs. (Landau, & Binder, 2013). Marcellus Field Gas Production (Million of BTUs) MEMORANDUM 3 3 Min 30000 Max 65000 Average production 45728.3 Recommendations: NPV is calculated from following formulas Here: Ct = net cash inflow particular period, Co = total investment costs r = discount rate, t = number of time periods For PennEast project Fall cost = $270000 + $460000 /2 = $365000 r = 15% t = 20 years For Atlantic Sunrise project Fall cost= $200000 + $250000 /2 = $225000 r = 15% t = 20 years A positive NPV will be pursuing (useful) for the company further estimated project. So, we would recommend Atlantic Sunrise project to use for invest in secondary commodities such as electrical power and plastics to raise their profit margin because it is more positive as compared to PennEast project. Atlantic Sunrise is falling less than PennEast project ratio. (Booker, 2006). The risk associated with recommendations: PennEast project and Atlantic Sunrise are showing positive figure. But, we recommended Atlantic Sunrise project due to more positive sign of it. But, this calculation is based on assumption that is risk associated with it and assumption success depends on the organization stakeholder's efforts (Hiles, 2002). References Booker, J., (2006). Financial Planning Fundamentals. USA: CCH Canadian Limited. MEMORANDUM 3 4 Hiles, A., (2002). Enterprise Risk Assessment and Business Impact Analysis:: Best Practices. USA: Rothstein Associates Inc. Landau, D., P., & Binder, K., (2013). A Guide to Monte Carlo Simulations in Statistical Physics. USA: Cambridge University Press. There are several type of curve that can be use to set up Monte Carlo Simulation Marcellus Field Gas Production (Million of BTUs) Min Max 30000 65000 44125.65 Construction expected cost Minimum Maximum Total Expected Cost per miles ($) per miles ($) 365000 Construction expected cost 225000 270000 200000 460000 250000 730000 450000 PennEast Project miles Atlantic Project miles 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 365000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 225000 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 Answer 1 Net Present Value of Project PennEast at 5% Year Cash Flow 0 1 2 3 4 PV factor @5% -1000 200 300 400 500 NPV PV of cash flow 1.000 -1000.00 0.952 190.48 0.907 272.11 0.864 345.54 0.823 411.35 219.47 Net Present Value of Project Atlantic Sunrise at 5%At 5% Year Cash Flow 0 1 2 3 4 PV factor @5% -1000 500 400 300 200 NPV 1.000 0.952 0.907 0.864 0.823 PV of cash flow -1000.00 476.19 362.81 259.15 164.54 262.69 At 10% Year Cash Flow 0 1 2 3 4 NPV PV factor PV of cash flow -1000 1.000 -1000.00 200 0.909 181.82 300 0.826 247.93 400 0.751 300.53 500 0.683 341.51 71.78 At 10% Year Cash Flow 0 1 2 3 4 -1000 500 400 300 200 NPV PV factor PV of cash flow 1.000 -1000.00 0.909 454.55 0.826 330.58 0.751 225.39 0.683 136.60 147.12 At 12% Year Cash Flow 0 1 2 3 4 PV factor @12% -1000 1.000 200 0.893 300 0.797 400 0.712 500 0.636 NPV At 12% Year Cash Flow 0 1 2 3 4 -1000 500 400 300 200 NPV PV factor @12% 1.000 0.893 0.797 0.712 0.636 PV of cash flow -1000.00 178.57 239.16 284.71 317.76 20.20 PV of cash flow -1000.00 446.43 318.88 213.53 127.10 105.94 Free Cash flows Year 0 Cost of new project Installation cost Estimated units sales Estimated sales price Total Estimated Revenue Year 1 Variable cost per unit Total Variable cost Contribution Fixed cost Depreciation Profit Before tax Less: Tax 40% Net income Add: Depreciation Operating Cash flows (A) Initial working capital Less: Additional working capital Net cash flows Changes in working capital (B) Free Cash flow (A-B) Year 2 -3000000 -100000 40000 $200 $8,000,000 65000 $200 $13,000,000 $130 $5,200,000 $2,800,000 $40,000 $620,000 $2,140,000 $856,000 $1,284,000 $620,000 $130 $8,450,000 $4,550,000 $40,000 $620,000 $3,890,000 $1,556,000 $2,334,000 $620,000 $1,904,000 $2,954,000 $400,000 $1,504,000 $650,000 $2,304,000 $400,000 $1,504,000 $250,000 $2,704,000 -60000 -3160000 NPV Year 0 Year 1 Year 2 Year 3 Cash flows PV factors at 15 PV of cash flows -3160000 1 -$3,160,000.00 $1,504,000 0.870 $1,307,826.09 $2,704,000 0.756 $2,044,612.48 $1,031,500 0.658 $678,227.99 NPV $870,666.56 Year 3 35000 $150 $5,250,000 $130 $4,550,000 $700,000 $40,000 $620,000 $40,000 $16,000 $24,000 $620,000 $644,000 $262,500 $381,500 ($387,500) $1,031,500 PK##########!#.#########[Content_Types].xml #(########################################################################### ################################################################################ ################################################################################ ################################################################################ ################################################################################ ###########################################################################UN 0###q)#B)## |U##x#B#Ls #*d1M#N@##Ib# #F#i#{S}#1 O`#9F`;!,#JRt+BD-#F#0>6n.`-6s5]#8': %w9q#,U#3%##.>bw##>#RnY#9S&o#####PK##########! #U0####L######_rels/.rels #(########################################################################### ################################################################################ ################################################################################ ################################################################################ ################################################################################ #############################################################N0 HCnH#LH!T#$#$@#Jc? 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PennEast can down within the $270000 to $460000 per miles while Atlantic Sunrise can down by $200000 to 250000 per mile. The pipeline project has 20 years of life. But, gas prices are uncertain that reduce the stability of its lifecycle in the market. The previous year gas price was approximate $2, $4 and $8 MMBtu while current years Marcellus Field Gas Production was minimum 30000, mode 50000 and maximum 65000 millions of BTUs. (Landau, & Binder, 2013). Marcellus Field Gas Production (Million of BTUs) MEMORANDUM 3 3 Min 30000 Max 65000 Average production 45728.3 Recommendations: NPV is calculated from following formulas Here: Ct = net cash inflow particular period, Co = total investment costs r = discount rate, t = number of time periods For PennEast project Fall cost = $270000 + $460000 /2 = $365000 r = 15% t = 20 years For Atlantic Sunrise project Fall cost= $200000 + $250000 /2 = $225000 r = 15% t = 20 years A positive NPV will be pursuing (useful) for the company further estimated project. So, we would recommend Atlantic Sunrise project to use for invest in secondary commodities such as electrical power and plastics to raise their profit margin because it is more positive as compared to PennEast project. Atlantic Sunrise is falling less than PennEast project ratio. (Booker, 2006). The risk associated with recommendations: PennEast project and Atlantic Sunrise are showing positive figure. But, we recommended Atlantic Sunrise project due to more positive sign of it. But, this calculation is based on assumption that is risk associated with it and assumption success depends on the organization stakeholder's efforts (Hiles, 2002). References Booker, J., (2006). Financial Planning Fundamentals. USA: CCH Canadian Limited. MEMORANDUM 3 4 Hiles, A., (2002). Enterprise Risk Assessment and Business Impact Analysis:: Best Practices. USA: Rothstein Associates Inc. Landau, D., P., & Binder, K., (2013). A Guide to Monte Carlo Simulations in Statistical Physics. USA: Cambridge University Press. There are several type of curve that can be use to set up Monte Carlo Simulation Marcellus Field Gas Production (Million of BTUs) Min Max 30000 65000 44125.65 Construction expected cost Minimum Maximum Total Expected Cost per miles ($) per miles ($) 365000 Construction expected cost 225000 270000 200000 460000 250000 730000 450000 PennEast Project miles Atlantic Project miles 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 365000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 225000 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 Answer 1 Net Present Value of Project PennEast at 5% Year Cash Flow 0 1 2 3 4 PV factor @5% -1000 200 300 400 500 NPV PV of cash flow 1.000 -1000.00 0.952 190.48 0.907 272.11 0.864 345.54 0.823 411.35 219.47 Net Present Value of Project Atlantic Sunrise at 5%At 5% Year Cash Flow 0 1 2 3 4 PV factor @5% -1000 500 400 300 200 NPV 1.000 0.952 0.907 0.864 0.823 PV of cash flow -1000.00 476.19 362.81 259.15 164.54 262.69 At 10% Year Cash Flow 0 1 2 3 4 NPV PV factor PV of cash flow -1000 1.000 -1000.00 200 0.909 181.82 300 0.826 247.93 400 0.751 300.53 500 0.683 341.51 71.78 At 10% Year Cash Flow 0 1 2 3 4 -1000 500 400 300 200 NPV PV factor PV of cash flow 1.000 -1000.00 0.909 454.55 0.826 330.58 0.751 225.39 0.683 136.60 147.12 At 12% Year Cash Flow 0 1 2 3 4 PV factor @12% -1000 1.000 200 0.893 300 0.797 400 0.712 500 0.636 NPV At 12% Year Cash Flow 0 1 2 3 4 -1000 500 400 300 200 NPV PV factor @12% 1.000 0.893 0.797 0.712 0.636 PV of cash flow -1000.00 178.57 239.16 284.71 317.76 20.20 PV of cash flow -1000.00 446.43 318.88 213.53 127.10 105.94 Free Cash flows Year 0 Cost of new project Installation cost Estimated units sales Estimated sales price Total Estimated Revenue Year 1 Variable cost per unit Total Variable cost Contribution Fixed cost Depreciation Profit Before tax Less: Tax 40% Net income Add: Depreciation Operating Cash flows (A) Initial working capital Less: Additional working capital Net cash flows Changes in working capital (B) Free Cash flow (A-B) Year 2 -3000000 -100000 40000 $200 $8,000,000 65000 $200 $13,000,000 $130 $5,200,000 $2,800,000 $40,000 $620,000 $2,140,000 $856,000 $1,284,000 $620,000 $130 $8,450,000 $4,550,000 $40,000 $620,000 $3,890,000 $1,556,000 $2,334,000 $620,000 $1,904,000 $2,954,000 $400,000 $1,504,000 $650,000 $2,304,000 $400,000 $1,504,000 $250,000 $2,704,000 -60000 -3160000 NPV Year 0 Year 1 Year 2 Year 3 Cash flows PV factors at 15 PV of cash flows -3160000 1 -$3,160,000.00 $1,504,000 0.870 $1,307,826.09 $2,704,000 0.756 $2,044,612.48 $1,031,500 0.658 $678,227.99 NPV $870,666.56 Year 3 35000 $150 $5,250,000 $130 $4,550,000 $700,000 $40,000 $620,000 $40,000 $16,000 $24,000 $620,000 $644,000 $262,500 $381,500 ($387,500) $1,031,500