Develop a pro forma set of income and cash flow statements for awind energy plant with the following parameters, and calculate theplant’s NPV, IRR and LCOE:
-Overnight capital costs are $1.2 million, all incurred in Year0. There is no land acquisition cost assumed here.
-The plant has a salvage value of $200,000 at the end of theplant’s life
-Annual revenues from spot market sales are $400,000.
-Annual operating costs are $30,000.
-The plant qualifies for the same 3-Year MACRS schedule that weused in class.
-The plant faces a 34% tax rate
-There are no accounts payable or receivable, but the plant isassumed to have a cash net working capital requirement of $300,000,beginning in Year 0. This working capital can be liquidated at theend of the final year of operation.
-The lifetime of the plant is 5 years
-The discount rate is 20%
-The plant qualifies for a production subsidy of $200,000 peryear for all operating years. A hint here is to model thisproduction subsidy as a revenue source.
-The plant produces 10,000 Megawatt-Hours (MWh) of electricityin each year, Years 1 through 5. (You'll need this to calculateLCOE.)
