UK Oil PlcSolar Power Generating PlantIn view of the volatile oil price and depleted North Sea Oil Reserves, the Board would like you to evaluate the following alternative investment – the Purchase and Operation of a Solar Power Generating Plant.The £200 million capital investment will be raised by either Equity or a mixture of Equity and Debt, though banks will only agree to provide up to £100 million. The Cost of Equity is estimated to be 20% and the Debt is currently either 7% for Floating Rate Debt or 8% for Fixed Rate. The expected life of this project is 20 years.A proposed Schedule of Activities, Expected Duration & Financial Implications is detailed below..
this is the main question ,,,
and this is the Required:
Your Financial Evaluation, of this investment, outlining/justifying:
- Your recommended Method of Finance
- Calculation of the Weighted Average Cost of Capital
- The Critical Path using appropriate Activity Durations
- Your recommended supplier
- Calculation and Evaluation of the Payback, NPV & IRR incorporating appropriate Corporation Tax and Written Down Allowances
- Whether to invest or not in the project
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