American Journal of Economics, Finance and Management
Articles Information
American Journal of Economics, Finance and Management, Vol.4, No.1, Feb. 2018, Pub. Date: Jan. 25, 2018
Profitability Analysis of a Proposed Aku Dam-Toe Small Hydropower Project
Pages: 13-21 Views: 1538 Downloads: 644
Authors
[01] Obinna Ajala Chinyere, Department of Mechanical Engineering, Ahmadu Bello University, Zaria, Nigeria; Renewable Energy Unit, National Agency for Science and Engineering Infrastructure (NASENI), Idu, Abuja, Nigeria.
[02] Fatai Olukayode Anafi, Department of Mechanical Engineering, Ahmadu Bello University, Zaria, Nigeria.
[03] Nkiru Rosemary Obasih, Renewable Energy Unit, National Agency for Science and Engineering Infrastructure (NASENI), Idu, Abuja, Nigeria.
[04] Dangana Mallam Kulla, Department of Mechanical Engineering, Ahmadu Bello University, Zaria, Nigeria.
[05] Doris Oluchukwu Okozor, Renewable Energy Unit, National Agency for Science and Engineering Infrastructure (NASENI), Idu, Abuja, Nigeria.
[06] Emmanuel Osiewundo Ojo, Renewable Energy Unit, National Agency for Science and Engineering Infrastructure (NASENI), Idu, Abuja, Nigeria.
Abstract
The study seeks to address the profitability analysis of proposed Aku-dam toe small hydropower project. The economic metrics of the project with an investment cost of N 820,788,529 proposed to be partly financed by a bank loan and an equity contribution of 30% showed a very high return on investment, with a project payback period or breakeven point of 7 years which is timely enough for an investor to re-coup his or her initial capital from the project that has a minimum life of 30 years and a maximum of 50 years. The net present value (NPV) of N238,800,732 shows that the project is capable of making profit after paying for its investment cost and running cost. The internal rate of return (IRR) of the project from calculation stood at 17.09%, above the hurdle rate of 12%. The benefit cost ratio of the project is 1.12 which is above unity, a good sign to show the profitability index of the project is favourable.
Keywords
Economic, Viability, Aku-Dam, Small Hydropower, Energy
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