Question

Today (year 0), a new 7-megawatt (MW) solar panel farm is constructed at a direct cost of $10 million. The indirect cost of 10% of the direct cost was spent. Four years from today, a smaller 6-MW solar farm will be added to the existing farm. The cost indices of today and after 4 years are 400 and 600 respectively. If the cost-capacity factor is 0.75 for solar panel construction, what is the estimated total capital investment (direct indirect) for the smaller 6-MW farm

Answer 1

Answer:

14.70 m

Explanation:

The computation of estimated total capital investment (direct indirect) for the smaller 6-MW farm is shown below:-

Cost of 6MW plant = Cost of 7MW today × (Index today ÷ Index in past) × (Capacity of 6MW plant ÷ Capacity of 7MW plant )^Cost capacity factor

= = 1.1 × 10m × (600 ÷ 400) × (6 ÷ 7)^0.75

= 14.6985

or

= 14.70 m

So, for computing the cost of 6MW plant we simply applied the above formula.