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Question: a municipality is considering an investment in a small renewable...

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A municipality is considering an investment in a small renewable energy power plant with the following parameters. The cost is $420,000, and the output averages 50 kW year-round. The price paid for electricity in the plant gate is $0.04/kWh. The investment is to be evaluated over a 25-year time horizon, and the expected salvage value at the end of the project is $50,000. The MARR is 6%

a) Calculate the NPV of this investment and determine whether it is financially attractive.

b) Calculate the operating credit per kWh which the government would need to give to the investment in order to make it break even financially. Express your answer to the nearest 1/1000th of dollar.

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