Question
PLEASE DRAW A CASH FLOW DIAGRAM AND THEN ANSWER! If there is no diagram = Thumbs down!!!!! If the University of California San Diego is
PLEASE DRAW A CASH FLOW DIAGRAM AND THEN ANSWER! If there is no diagram = Thumbs down!!!!!
If the University of California San Diego is considering a plan to build an 8 - mega watt cogeneration plant to provide for part of its power needs. The cost of the plant is expected to be $41 million. The University consumes 55,000 mega watt hours per year at a cost of $120 per mega watt hour.
a.) If the University will be able to produce power at half the cost that it now pays, what rate of return will make it on its investment for an expected power plant life of 30 years?
b.) If, in addition, the University can sell an average of 12,000 mega watt hours per year back to the utility at $90 per mega watt hour, what rate of return will it make?
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