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

Explanation:

Answer:

IRR = 0.24495

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 =[(FV)/(PV)]^(1/n) -1`

Where FV is final value and PV is present value

`IRR = [(20)/(0.25)]^(1/20) -1`

IRR = 0.24495