A Green Winter: The Case of Proposed Jiminy Peak Mountain Resort Wind Turbine
A Green Winter: The Case of Proposed Jiminy Peak Mountain Resort Wind Turbine
Case of Proposed
Jiminy Peak Mountain
Resort Wind Turbine
Team 2 Presentation
Case study Description
Capital
Budgeting Techniques of Capital Budgeting
Value – • n
• NPV=∑Rt/ (1+i)^t
NPV • t=1
• Where : Rt=Net cash inflow minus outflows during a single period t
• i=Discount rate or return that could be earned in
alternative investments
• t=Number of timer periods
Data Figures
Estimated total purchase and installation costs $3.85 million
the proposed
Annual Cost Savings 2.4 million kWh
Sales Excess Elelctricity/year $172,000
case study Cash flow from opening earlier/year $95,000
Wind Turbing Maintenance/year $81,000
Income Tax rate 38%
Items Amount Duration Total Amount
Annual Cash Flows
Annual Cost Saving (Power) $ 384,000.00 25 $ 9,600,000.00
Net Present Value Sales of excess electricty $ 172,000.00 25 $ 4,300,000.00
Annual Expenses
Maintance Cost $ 81,000.00 25 $ 2,025,000.00
Intersest Expense ( 10 years ) $1,297,568.20 $ 1,297,568.00
Sum of All Future Expenses (Pre Principal Payment)- B $ 3,322,568.00
Net Cashflow before Tax - C= (A-B) $ 17,579,107.00
recover the cost of investment Cost Saving = 2.4 mkWh * 0.16 384,000.00
• Unreliable source of energy – When the wind is low turbine stops there won’t be any energy
generation.
• Risk to the vertebrates: Natural habitat for birds and bats will be at risk as the enormous blades
might become a reason for their reduction in numbers if not sited or placed properly.
• Initial investment is high – Setting up the wind power plant is a costly affair.
• Thunderous noise: Gigantic wind turbine can be very loud and may disturb the local
community.
Environmental factors : Advantages
• Renewable source of energy - Wind is an Inexhaustible energy. The energy does not stop
or perish like other natural fossil fuel such as oil and gas.
• Pollution Free and reduction in Global Warming – Wind Turbines do not emit any gases
that harm the environment nor Wind Turbines do not require water to cool down.
• Cost-Efficient Source of Energy - Cheapest natural energy source. Acquires less space to
set up.
• Road congestion: Transportation for the raw material used in the construction may add to the road
congestion.
• Hindering the peace: Huge structure needs regular maintenance which will be cause disturbance for
inhabitants.
• Unforeseen risks: Sustainability of such a huge structure on a mountain may be risky for any unforeseen
circumstances.
• Because it is a clean energy source, wind energy reduces health care and environmental costs associated
with air pollution
Conclusion
• Wind energy is the cheapest form of energy and does not pollute the
environment in anyway.
• Social factors may be a matter of concern but for a very limited span
of time.
• The Net Present Value (NPV) of all the discounted cash flow is $1,055,
183.45
• An IRR value of 8.93% > 6% (discount rate)
• Payback Period of 4 years and 27 days only.
Recommendations
• Considering all the financial,
environmental, social factors we
recommend that Jiminy Peak
should go ahead with the
project of installing a wind
turbine at the mountain peak
and earn more profit that it can.