Question
You are asked to evaluate the viability of a wind turbine project. A single, small-scale wind turbine costs $20,000 and can be sold as scrap
- You are asked to evaluate the viability of a wind turbine project. A single, small-scale wind turbine costs $20,000 and can be sold as scrap after 20 years for $1,250. You would purchase a service contract for normal maintenance items at $500 per year. You can sell the energy created for $1000 a year, which is a bigger return than if you were to consume the energy yourself. Now, instead of assuming you invest $20,000 to buy the turbine at the beginning of the project, you make a downpayment of 10% ($2,000) and finance the rest with a loan with a 3% annual interest rate with monthly payments.
- Determine whether this project is viable and if the project is not viable, what initial cost would make it so under these conditions?
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