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Analytics & Experimentation questions require understanding of core concepts and practice. PracHub provides solutions with explanations to help you master analytics & experimentation interviews.

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This is a easy difficulty Analytics & Experimentation question, commonly asked during Technical Screen rounds at Capital One.

What role is this question designed for?

This question is commonly asked for Data Scientist candidates at Capital One during technical interviews.

Calculate Minimum Energy for 10% ROI and Investment Approval

Q: Calculate Minimum Energy for 10% ROI and Investment Approval

This question evaluates financial modeling and unit-economics competencies, including ROI calculation, cost-volume-profit reasoning, and capacity feasibility for a renewable energy project.

Renewable Plant ROI and Capacity Feasibility

Context

You are evaluating whether a proposed renewable energy plant can achieve a 10% annual ROI, given its costs, prices, and capacity. Assume ROI is based on annual operating profit before taxes and depreciation.

Given

Selling price: $40 per kWh
Variable cost: $20 per kWh
Fixed operating cost: $25 million per year
Land lease: $5 million per month (i.e.,$ 60 million per year)
Maximum annual capacity: 8.8 million kWh per year
Initial investment (capex): $400 million
Target ROI: 10% per year on the initial investment

(Note: The mention of “avg output 1,000 kWh” is inconsistent in units for a rate; use the stated annual capacity of 8.8 million kWh/year for feasibility.)

Questions

(a) What is the minimum annual energy (kWh) the plant must generate and sell to achieve a 10% annual ROI?

(b) Based on that quantity relative to the 8.8 million kWh/year capacity, would you approve the investment? Explain briefly.

Hint

ROI = annual profit ÷ initial investment. Annual profit = (price − variable cost) × Q − (fixed cost + annual lease). Solve for Q and compare with capacity.

Given

Selling price: $40 per kWh

Variable cost: $20 per kWh

Fixed operating cost: $25 million per year

Land lease:

5 million per month (i.e.,

60 million per year)

Maximum annual capacity: 8.8 million kWh per year

Initial investment (capex): $400 million

Target ROI: 10% per year on the initial investment

(Note: The mention of “avg output 1,000 kWh” is inconsistent in units for a rate; use the stated annual capacity of 8.8 million kWh/year for feasibility.)

Calculate Minimum Energy for 10% ROI and Investment Approval

Quick Overview

Renewable Plant ROI and Capacity Feasibility

Context

Given

Questions

Hint

Solution

Comments (0)

Calculate Minimum Energy for 10% ROI and Investment Approval

Quick Overview

Renewable Plant ROI and Capacity Feasibility

Context

Given

Questions

Hint

Solution

Comments (0)