An electrical utility wishes to decide on whether to build a steam generating power plant or a hydro power facilty. Find the cost of the Hydro plant that makes both choices an equal investment. The interest rate for both choices is 5% compounded annually.
The details for the steam plant are:
Life: 20 years
Initial cost: $10,000,000
Annual Power output: 300,000 MWh
Maintenance cost: $0.004/kWh
Salvage value: 10% of Initial cost
The hydro plant:
Life: 30 years
Annual Power output: 300,000 MWh
Maintenance cost: $0.002/kWh
Salvage value: 10% of initial cost