ANDIG5 – Questions

Instructions: Before answering these questions, first download the DIGESTER_ECON.XLSM spreadsheet here.

1.  How much do the AgSTAR equations suggest that a plug-flow digester would cost to install on a 1,500-cow dairy operation in 2013, including H2S treatment, utility charges, and a solids separator?

a. $1.9 million or $950/cow

b. $2.0 million or $1,333/cow

c. $2.3 million, or $1,150/cow

 

2. The net present value (NPV) and the internal rate of return (IRR) are popular criteria for evaluating an investment.  If an investment yields an NPV of exactly zero, what will the IRR be for that investment?

a. negative

b. zero

c. equal to the interest opportunity cost rate.

 

3.  (See the “O&M help” sheet) The default data describes a situation where the farm owner is responsible for engine maintenance.  The engine is assumed to need an overhaul every four years, with a complete spare engine replacing one of the overhauls.  Suppose the owner decides to buy an engine maintenance contract instead of paying for the engine overhauls and spare engine as they occur.  How much could she afford to pay per kWh for the engine maintenance contract and still be as well off as paying for the engine overhauls and spare engine?

The owner also spends a half-hour/day doing oil changes, routine maintenance, and inspections, and cleans sludge out of the digester once every ten years, and will still need to do those tasks even with the maintenance contract.

a. around 2 cents/kWh

b. around 3 cents/kWh

c. around 4 cents/kWh

ANSWERS