Problem 7 A public-private initiative in Texas will significantly expand the win
ID: 1210238 • Letter: P
Question
Problem 7 A public-private initiative in Texas will significantly expand the wind out the state. The cash flow for one phase of the project involving Central P -private initiative in Texas will significantly expand the wind-generated energy through- oint Ener gy, a trans- mission utility company, is shown. Given reinvestment rate of 14% per year for ex. per year for excess funds and 12% for MARR, Determine Year Net cash flow 50000 +22000 38000 2000 -1000 +5000 a) How many number of ROR values is expected and why? b) the Return on invested capital (ROIC), also known as Composite rate of return,CRR) c) Is the project economically viable?Explanation / Answer
a.
ROR = (Inflows – Outflows) / Outflows
= {(22,000+38,000 + 5,000) – (50,000 + 2,000 + 1,000)} / (50,000 + 2,000 + 1,000)
= (65,000 – 53,000) / 53,000
= 0.2264