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The table below summarises the nancial information for construction of a solar power plant in Western Australia (Plan A). Plan A Land price $200,000 Cost
The table below summarises the nancial information for construction of a solar power plant in Western Australia (Plan A). Plan A Land price $200,000 Cost of panels and equipment $6,000,000 Installation cost $1,000,000 Maintenance cost per year $150,000 Electricity production per year 2,000,000 kWh Fixed electricity price $0.6 per kWh Service life 50 years End of life value $3,000,000 Alternatively, we can use higher quality panels and equipment to increase annual electricity production (Plan B}. This increases the cost of panels and equipment to $8,000,000. The annual maintenance costs are also going to be decreased to $?0,000. All of the other parameters remain unchanged. What is the minimum annual electricity production which results in the same benet to cost ratio for the two plans? Assume an interest rate of 10%
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