Cambridge Energy Solutions
A Provider of Information and Energy Solutions
Cost of debt remains unchanged over life of project.
Salvage value is assumed to be zero at the end of the project life.
Opportunity cost of debt is equal to debt rate for IDC calculations.
Tax Depreciation Schedule follows Half-Year Convention
|Period||First year of operation is assumed to be period 1. All present values are calculated to year 1.|
|Construction Payment Timing||Based on length of construction.|
|Construction Cost Real Year 1 $||Total construction costs divided by length of construction.|
|Construction Cost Nominal $||Construction Real Yr 1 $ * (1+Escalation Rate)^(Period-Year 1 Period)|
|Interest During Construction||(One half of Nominal Construction Cost + previous year's Cumulative Construction Cost) * Debt Rate.|
|Cumulative Tax Basis||Cumulative Construction Cost + Interest During Construction.|
|Tax Depreciation Schedule||Based on IRS schedule for 20-year recovery rate.|
|Tax Depreciation||Cumulative Tax Basis * Tax Depreciation Schedule.|
|Property Tax & Insurance (Ptax & Insur)||Cumulative Tax Basis * Property Tax & Insurance rate.|
|Revenue||Project revenue. For IRR and NPV calculations, Revenue values are input. For FCR calculations, Revenue for first year after construction is completed is calculated. For all calculations, year 2 onward is grown at Escalation Factor.|
|Taxable Income||Revenue - Tax Depreciation - Property Tax & Insurance|
|Income Tax||Taxable Income * Tax Rate.|
|Cash Flow||Taxable Income - Income Tax + Tax Depreciation|
|Year 1 Present Value - Cash Flow||
For IRR calculation = Cash Flow / (1+IRR)^Period
For NPV and FCR calculations = Cash Flow / (1+WACC)^Period
|Simple Cycle Combustion Turbine Plant||Includes assets used in the production of electricity for sale by the use of such prime movers as jet engines, combustion turbines, diesel engines, gasoline engines, and other internal combustion engines, their associated power turbines and/or generators, and related land improvements. Does not include combustion turbines operated in a combined cycle with a conventional steam unit.|
|Steam/Combined Cycle||Includes assets used in the steam power production of electricity for sale, combustion turbines operated in a combined cycle with a conventional steam unit and related land improvements. Also includes package boilers, electric generators and related assets such as electricity and steam distribution systems as used by a waste reduction and resource recovery plant if the steam or electricity is normally for sale to others.|