Renewable Energy Project Financial Plan Coursework

Renewable Energy depict Financial Plan - Coursework deterrent exampleDuke Energy alongside the plan will be depended on a current purchase by Duke Energy (DUK) within the solar energy. The goal is to debate on the projects decision and court evaluation process. This plan will entail project cost of detonating device, cash full points, cash flow statement, musical theme of enceinte in every hazard classification, risk class of assets, exhaustive financial features of the enterprise, as easily as the validation debate of whether the project must be undertaken. Black Mountain solar pick up Duke Energy currently bought an Arizona solar farm investment from Solon Corporation. The Black Mountain Solar sound projection is a 10-Megawatt (MW) 40,000 solar panel renewable energy farm located in Mohave County, Arizona. Project Cash Flow The ensuing spreadsheet indicates the cash flows, net get value (NPV), as well as the internal rate of return (IRR) for the Solar Farm Project that D uke Energy is interested in purchasing. Calculations for the Project Cash Flow Period Cash Flows NPV $35,366.48 Dec-08 453,000.00 Dec-09 556,000.00 Dec-10 128,000.00 Dec-11 440,000.00 Dec-12 550,000.00 Dec-13 740,000.00 NPV at 15% rate for a period of vanadium years is $ 35,366.48 woo of Project Capital The phrase cost of project capital is usually misunderstood. For instance, it is not the companys past cost of finances like a coupon settlement of present stocks. The essential cost is a chance cost. This refers to the rate by which investors may offer funds for the capital budget project under concern now Emery, Finnerty, & Stowe, 2007). Cost of capital = %debt*After Tax Cost Of Debt + %equity*Required deliver On justice After Tax Cost Of Debt = (1-TaxRate)*Required Return On Debt Required Return On Equity = Risk Free Rate + Beta*(Return On Market Risk Free Rate) = (313.38 + 0.16)/ 21.56 = 14.72 = 15%. Project Cost Flow Project cash flow PVIF 15% P.V Year 1 2 3 4 5 556000 1280 00 440000 550,000 740,000 0.8696 0.7561 0.6575 0.5485 0.4360 483497 96781 289300 364825 480395 Less initial capital 372000 +NPV 1342798 IRR using 15% Years Cash flow PVIF 15% P.V 1 2 3 4 5 556000 128000 440000 550000 740000 0.8696 0.7561 0.6575 0.5485 0.4360 483497 96781 289300 364825 480395 1714998 Using 10% Years Cash flow PVIF 15% P.V 1 2 3 4 5 556000 128000 440000 550000 740000 0.8696 0.7561 0.6575 0.5485 0.4360 505459.6 105779.2 330572 402657.9 512475.6 1856944.3 Therefore IRR = xZ/-c = w r/x 7 + r = z = w r + r x - c x -7 = z = 15% - 10% + 10% 569810.8 72232.8 72232.8 z = 2849054 z = 2849054 72232.8 = 39.44 + 10% IRR = 49.44 Cash Flow Statement Years Ended December (In millions) 2011 CASH FLOWS OPERATING ACTIVITIES profit Income $ 2,235 Changes to settle net income to net cash offered by functioning activities Depreciation and amortization (including amortization of atomic fuel) 2,026 Equity component of AFUDC (260) Gains on sales of other assets (19) Impairment of goodwil l and other long-lived assets 335 Deferred income taxes 602 Equity in earnings of unconsolidated affiliates (160) Contributions to qualified pension plans (200) Accrued pension and other post-retirement benefit cost 104 (Increase) decrease in Net realized and unrealized mark-to-market and hedging transactions (48) Receivables 2 Inventory (247) some other current assets 185 Increase (decrease) in Accounts payable 41 Taxes accrued 27 separate current liabilities (254) Other assets 12 Other liabilities (188) Net cash provided by operating