Compute energy needed for 10% ROI
Company: Capital One
Role: Business Analyst
Category: Statistics & Math
Difficulty: medium
Interview Round: Technical Screen
A proposed plant must deliver at least a 10% annual ROI on an initial investment of $400M. Annual economics (assume all numbers are annual unless noted): land lease = $5M per month; fixed O&M = $25M per year; variable cost = $20 per MWh; selling price = $40 per MWh. The plant’s maximum annual capacity is 8.8 million MWh. Compute: (1) the minimum annual MWh that must be generated and sold to achieve the 10% ROI after all operating costs; (2) whether the target is feasible versus the 8.8M MWh capacity; (3) the break-even selling price if the plant runs at full 8.8M MWh; (4) the new required MWh if price drops 10%. Extension: if the average output is constrained to 1,000 MWh/day, quantify the shortfall versus the 10% ROI requirement and propose two levers to close the gap.
Overview: Calculate the minimum annual energy sales a $400M plant needs for a 10% ROI after lease and operating costs. Check capacity, the full-capacity break-even price, a 10% price drop, and the shortfall and two ways to close it at 1,000 MWh per day.
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