Use the current values in the Wind Energy model with RVs (Random Variables) to answer the following questions.

Of course, you will have to change the values that are essential to each question asked. Following each question restore the model to its original values.

 

Q1    Consider this wind turbine to cost $1,000,000. What is the effect on profit for a 1 mph increase in average windspeed?

 

 

 

Q2    Consider this wind turbine to cost $1,000,000. What is the effect on profit for a 1 mph increase in the volatility (standard deviation) of windspeed?

 

 

 

Q3    Returning to the original values, assume the rotor diameter is 100ft. Further assume that the PV of the cash flows equals the cost of the turbine making this a neutral undertaking. For $20,000 extra, however, you can have a rotor diameter of 120ft. Should you proceed with the 120ft. rotor? Explain.

AccountingQueen

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Status NEW Posted 20 Aug 2017 01:08 PM My Price 5.00

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