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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
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%. Plan A Plan B The land price $25,000,000 $30,000,000 Wind turbines $100,000,000 $120,000,000 Operation and maintenance cost per $2,500,000 $3,500,000 year Electricity production per year 80,000,000 KWh 100,000,000 kWh Fixed electricity price $0.45 per kWh $0.45 per kWh Service life 30 years 45 years End of life value $50,000,000 $75,000,000
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