PP1

                                                                                                        PP2

Capital costs

                                                        $1,000 per year of construction

Construction time

                                                                    2 years

                                                                                                      4 years

Operating costs (fuel)

                                                                 $500 per year

                                                                                                   $100 per year

Revenues

                                                                $1,000 per year

Investment horizon

                                                             12 years (2020-2032)


Tasks:

·       Fill in the costs and revenues for the plant 1 (sheet “PP1”) and plant 2 (sheet “PP2”)

·       Calculate NPV and IRR for both plants, using discount rate 10% (sheet “Results”)

·       Mark optimal investment (PP1 or PP2) using the “IF” function

·       Find the discount rate level at which both plants have the same NPV using the goal seek
function