Your company is planning to construct a gas$-$fired power plant in the Philadelphia area. They are considering one of the two following options, a Rolls Royce simple cycle gas turbine generator and a

General Electric combined cycle gas turbine$/$steam turbine generator. Each power plant will produce power after construction for $30$ years. Details on the power plant costs, capabilities, and heat rat

are included in the table below. The price of natural gas in the future is uncertain.

Table$1.$ Power Plant Financial and Operating Expenses

$[$IN IMAGE$]$

Compare these options in terms of NPV and IRR over the range of possible gas prices. Costs include annual fixed and variable O&M$,$ fuel, and emission permits. Revuene comes from electricity sales.

Consider $25\%$ of tax and straight$-$line depreciation for the lifetime of the plant $($year $1$ to year $30).$ Assume a discount rate for your company of $8\%.$ Explain the results of your analysis in a memo, and

make a recommendation. Should your company pursue a particular option, the alternative, or neither? Describe what kinds of changes to the provided assumptions would change your

recommendation $($e$.$g$.$ changes in fuel price$).$

$1)$ Draw the NPV and IRR of a project for fuel price.

$2)$ Find the fuel price that makes you indifferent between two projects.