The Clinton Nuclear Power Station was finished in 1987 after a period of constru
ID: 1093172 • Letter: T
Question
The Clinton Nuclear Power Station was finished in 1987 after a period of construction lasting about 15 years. Assuming an interest rate of 12% (during the period 1972-1987 the prime interest rate varied between 6% and a high of 21.5%, averaging in the teens most of the period), how much money did Illinois Power borrow each year for the 15 years if the final cost of the nuclear plant was $4B. Assume that Illinois Power borrowed the same amount each year - so l/15th of the total was borrowed the first year at 12%, and additional l/15th was borrowed the second year at 12%, etc.Explanation / Answer
5) let amount invested initially is P
2P = P*(1+ 0.01)^T
2 = (1+ 0.01)^T
take log both sides
log 2 = T * log(1.01)
T = log2/log(1.01)
T = 69.66 years
another method
T = 69/1 = 69
http://www.had2know.com/business/rule-of-69-70-72-doubling-time.html
6) 1500 * r > 10
r > 0.0067
r > 0.67%
r must be greater than 0.67%