Question
Some particulars for a project are as follows: Capital Cost ($ Mn) 1000 Annual Operating cost ($ Mn/yr) 10% of Capital Cost Annual Benefits ($Mn/yr)
Some particulars for a project are as follows:
Capital Cost ($ Mn) | 1000 |
Annual Operating cost ($ Mn/yr) | 10% of Capital Cost |
Annual Benefits ($Mn/yr) | 400 |
Useful Life (years) | 20 |
Interest/Discount rate (percent) | 10 |
a) What is the Life Cycle Cost (LCCs) of the project expressed in present value and future value terms?
b) What is the Life Cycle Cost (LCCs) of the project with year 10 as the base year? c) What is the NPV of the project with year 15 as the base year? d) What is the Pay-back (PB) period for this project? e) What is Equivalent Annual Cost (EAC) for this project?
f) At what discount rate will this project become unviable?
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