Question

1. The unit cost of installing a solar power system per km² was $5,000 in 2010 when the construction cost index was 1,850. Construction of a 5 MW power system requires 50 km² of land. Estimate the cost of constructing a solar power system of 20 MW in 2020 given that the construction cost index is 2,450 and the size-factor is 0.75? 2. A company that manufactures general-purpose transducers invested $2 million four years ago in high-yield junk box bonds. If the bonds are now worth $2.8 million, what is the interest rate per year based on (a) Simple interest? (b) Compound interest? 3. Suppose you borrow $24,000 now at an interest rate of 10% per year and promise to repay the loan with payments of $3,000 per year starting one year from now. (a) Draw the cash flow diagram. (b) How many payments would you make? (Hint: Use a single decimal.) 4. What is the equivalent future worth of the following cash flow diagram in year 12 if the interest rate is 12%? (Use gradient series whenever appropriate) $400 $300 $100 $150 $200 $250 10 2 3 4 5 6 7 9 10 11 12 $2,000 $2,000

Answer 1

You have asked multiple unrelated questions in the same post. I have addressed the first one. Please post the balance questions separately one by one.

Q - 1

Area required for 5 MW = 50 km2 of land

Hence, area required for 20 MW, A = 20 x 50 / 5 = 200 km2

Cost of construction per km2 in 2010 = C0 = 5,000

Index in 2010, I0 = 1,850

Index in 2020, I1 = 2,450

Size factor, S = 0.75

Hence, the cost of constructing in 2020 = A x S x C0 x I1 / I0 = 200 x 0.75 x 5,000 x 2,450 / 1,850 = $  993,243