SOLVE IN EXCEL AND SHOW THE FORMULAS USED FOR THE WORKING TO GET UPVOTE

1. A power company is planning on developing a new concentrating solar power plant. The capital cost for the plant is $75M in 2021 and $25M in 2022 - however, the plant will be able to commence full operation in 2022. Once built it will produce 400 Gwh per year for ten years (Year 2022-2031). Operating costs are $3M per year while the plant is running. It is estimated that the wholesale price of electricity will be approximately $65/MWh. 1. Income taxes are levied at a rate of 30% of profit (revenue less depreciated capital expenses, and operating expenses). II. Losses may be carried forward from previous years for the purpose of calculating taxable income. III. Capital expenses depreciate linearly based on the operational life of the plant (10 years). Depreciation may be claimed the year in which the expenses are incurred. IV. The company discount rate is 9% Using the accompanying spreadsheet: a. Calculate the Before-tax Cash Flow for the plant b. Determine the Tax payable for the project C. Calculate the After-tax Cash Flow for the project. d. Calculate the After-tax NPV of the project Ignore inflation in your calculation. In a separate file answer the following: e. What would be the effect on i) the amount of tax paid; and ii) the NPV if instead of linear depreciation, Capital expenses could be depreciated using a double declining balance at a rate of 10% with a balloon payment in the 10th year. Notes 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 65 65 65 65 65 65 65 65 65 65 65 Project Item Production Electricity Price Gross Revenue Capex Opex Before Tax Net Cash Flow Units Gwh S/MWh SAUD SAUD SAUD SAUD Notes Tax Calculation Gross Revenue Depreciated Capital Expenses Opex Loss carried forward Profit Taxable income Loss to carry forward Income Tax Payable Units SAUD SAUD SAUD SAUD SAUD SAUD SAUD SAUD 30% Notes After Tax Net Cash Flow Gross Revenue Capex Opex Income Tax After Tax Net Cash Flow Units SAUD SAUD SAUD SAUD SAUD % 9.00 NA Discount rate Discount factor Present values After Tax Net Present Value SAUD SAUD