A Green Winter

Topics: Wind turbine, Windmill, Net present value Pages: 2 (446 words) Published: January 12, 2013
1) Using pertinent information from the case text, prepare a capital budgeting analysis of the wind turbine project using the payback and net presentation value or internal rate of return models. Costs for Wind Turbine include:

SEDs Fee - Grant ($157,000 - 15,000) $142000
Purchase and Installationn - Grant ($3,900,000 - $582,000)$3,318,000 ·Loan for $3,300,000 for 10 years and 7.3 interest rate $465,935.76 per year (10 years) ·Cash $18,000
Insurance and Maintance Fee$75000 per year
Savings from installation of Wind Turbine:
2.3 million fewer kWh at $0.16 each$368,000 per year
sale of excess electricity$161,000 per year
Purchase of tax credits$166,667 per year (10 years)
Tax Credit$46,000 per year (10 years)
Open Early to public$100,000 per year

Year 1$140,731.24 Savings
($142,000 + $18,000 + $75,000 +$465,935.76 - $368,000 - $161,000 - $166,667 - 46,000 - 100,000) Year 2 - Year 10$300,731.24 * 9 = $2,706,581.16 Savings
($75,000 +$465,935.76 - $368,000 - $161,000 - $166,667 - 46,000 - 100,000) Year 11 - Year 25$554,000 *15 = $8,310,000 Savings
($75,000 - $368,000 - $161,000 - 100,000)
Total Savings for life of Wind Turbine is $11,157,312.40.

5) Using the results from 1 through 4 above, prepare a memo addressed to Brian Fairbank to present your feasibility study findings and make a recommendation as to whether the resort should proceed with the wind turbine project. To:Brian Fairbank

From:SED Team 4
Date: September 23, 2012
Subject: Pros and Cons for the Installation of a Wind Trubine

Mr. Faibank,
The SED team has found many advanatages and disadvantages related to installing a wind turbine at Jimmy Peak Mountain Resort. Some of the disadvantages include being hazardous to the birds, inconsistant source of power and it produces noise pollution. The advantages to having a wind turbine would be savings in costs, it is the cleanest form of energy, and wind is free. Taking all of the above into...
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