Question

Calculate the IRR if the power company gets a fixed feed-in tariff of $0.25/kWh, for 20 years and the salvage value of the plant after 20 years is $20 M.

Answer 1

Answer:

Step-by-step explanation:

Answer:

IRR = 0.24495

Step-by-step explanation:

Given data:

Tariff =$0.25

So, present value = $0.25

N = 20 year

salvage value after 20 year is $20 M

final value is $20 M

IRR means internal rate of return and it is given as

$IRR =[\frac{FV}{PV}]^{1/n} -1$

Where FV is final value and PV is present value

$IRR = [\frac{20}{0.25}]^{1/20} -1$

IRR = 0.24495