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Unformatted text preview: gas has a heat content very close to 1,000 BTU so the heating value of 1 mcf is can be taken to be 1 million BTU. The unit's electricity can be sold for $0.07 per kWh. The utility uses an interest rate of 15% when doing present value calculations. The utility is not sure what the price of gas will be per mcf. It would like to know the net present value of the turbine under three scenarios: $6/mcf, $7/mcf and $8/mcf. In doing the calculations, you should assume that all construction costs are paid in year 0 and the turbine operates from year 1 to year 20 (that is, maintenance, fuel costs and revenue apply in years 1-20). Also, you may assume that all prices and costs will be constant over the life of the turbine. In the first scenario, for example, take the price of gas to be $6/mcf in every year....
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This note was uploaded on 04/03/2012 for the course ECN 437 taught by Professor Peterwilcoxen during the Spring '12 term at Syracuse.
- Spring '12