Your company has excess steam available (400 metric tons per day) from your on-site generation plant and is considering selling it to a neighbouring site. Your generation system operates for 8000 hours a year and you are proposing selling it to a neighbouring site. our generation system operates for 8000 hours a year and you are proposing selling at $2/klb. What is the present value (at time zero) of all revenues for the next 5 year time frame? Assume a time value of money of 10%. Explain whether or not it is fair to consider the net cash flow to occur at the end of the period. How will you alter your analysis?
You need to set up an excel sheet, showing your calculations
Convert metric tons to lb
Base calculations on operating cycle of the plant in days (convert from 8000 hrs)
Calculate the year revenue base on sold steam unit price
Calculate the NPV and cumulative NPV based on uniform annual series revenue