Calculation Price per unit of Electricity

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Article #175

#175

From: John
Date: Thu, 05 Apr 2007 09:53

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Supose a complany develops a new power plant. The construction cost is 100
million $ payable on the 1 January 2008. The current maintenance cost s are
8 million $ per annum plus 2 million $ per 1 million units of electricity
consumed. Assume the quantity of Electrical produced is the same as the
quantity consumed. The consumption is 1 million units per annum beiinning in
2008.

Company X borrows the full amount for the construction cost as well as the
the other expenses exceeding the income at a rare of intrest of 5 %per
annum. The debt is paid with the income exceeding the expenditure. Assume
all annual costs and income are paid at the end of the year. Ignore any
taxes.

Calculate the price per unit of Electricity to enable company X to break
even over a term of 50 years starting on the 1 of January 2008, assuming the
power plant is worthless after 50 years.

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From: John@eskom.co.za
Newsgroups: aus.mathematics
Subject: Calculation Price per unit of Electricity
Date: Thu, 5 Apr 2007 11:53:31 +0200
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