Problem
The ABC Development Agency is planning construction of a wind-farm at a cost of N$29.2m, and will generate 50 000 MWh per year, which it can sell into the grid as a Feed-In-Tariff at N$1.25/kWh or N$1 250/MWh fixed for the next 20 yrs.
a) What is the Net Present Value of the project?
b) Is the project worthwhile if ABC uses 20% as its discount rate for project of this level of risk?