The discount rate on construction funds and power payments, Ask an Expert

Economics

A power plant has a nominal construction cost of $1,000 per kWe and a construction period of 9 years. Payments for the construction are made monthly and escalate at 6 percent per year. The anticipated capacity factor is 70 percent and the price for selling power will not escalate.

The discount rate on construction funds and power payments is 9% APR, compounded daily. The operational life of the plant is 40 years and the salvage value negligible.

(a) Determine the future value/kWh at the end of construction.
(b) Determine the future value/kWh at the end of life.
(c) Determine the levelized capital cost in $/kWh.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M971065

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