Question
Two different plans are under consideration for construction of a wind farm in Queensland, Australia. Using the financial information summarised in the table below
Two different plans are under consideration for construction of a wind farm in Queensland, Australia. Using the financial information summarised in the table below determine the best plan through comparing the NPVs. Assume an interest rate of 10%. The land price Wind turbines Operation and maintenance cost per year Electricity production per year Fixed electricity price Service life End of life value Plan A $25,000,000 $100,000,000 $2,500,000 80,000,000 kWh $0.45 per kWh 30 years $50,000,000 Plan B $30,000,000 $120,000,000 $3,500,000 100,000,000 kWh $0.45 per kWh 45 years $75,000,000
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Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
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