PowerCo Final Project

PowerCo Final Project - Running head: PowerCo Final project...

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Running head: PowerCo Final project 1 Dustin Taylor 8/14/2011 FIN-301 Karen Crisonino
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PowerCo Final Project 2 Introduction The purpose of this report is to analyze the data constructed by Powerco's economists to determine the potential profit or loss that would be obtained by building a new power generator. Because of increased demand, the current power plant will not sufficiently supply the demand for electricity over the next 10-12 years. A proposal has been set forth, and this report will determine if the new power generator should be constructed. Analysis Present value of expected costs: PV = $1/(1+i)^n Year Expected Costs (in millions) Interest Factor @ 8% Present Value (in millions) 1 25 .92593 23.14825 2 28 .85734 24.00552 47.15377 The present net value of the expected costs for the new generator is $47,153,770 . Present value of the expected after-tax cash profits: PV = $1/(1+i)^n Year Expected After-Tax Revenue (in millions) Interest Factor @8% Present Value (in millions) 3 6 .79383
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This note was uploaded on 08/14/2011 for the course FIN 301 taught by Professor Crisonino during the Spring '11 term at Edison State College.

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PowerCo Final Project - Running head: PowerCo Final project...

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