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A power plant that supplies a community with electricity costs \$1 billion to build, lasts 25 years, and has an annual operating cost of \$0

Finance

A power plant that supplies a community with electricity costs \$1 billion to build, lasts 25 years, and has an annual operating cost of \$0.2 billion; it costs \$0.1 billion to decommission the plant at the end of its lifetime (25 years). (Assume that the construction costs and the operating costs are paid at the beginning of the period, and that the decommissioning cost is paid at the end of the life of the plant.) The annual discount rate is r, with discount factor p= 1tr. Write the formula for the present value of the cost of providing this community with electricity for 100 years, including the decommissioning costs. (EDITED hint: First find the present value of providing electricity for 25 years. Denote this magnitude as 2. Then find the present value of incurring this cost, 2, 4 times: in periods 0, 25, 50, and 75.)

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