Chapter Contents:

• 5.1 Introduction
• 5.1.1 Evaluation of costs and benefits
• 5.1.1.1 Owner's evaluation
• 5.1.1.2 Banker's evaluation
• 5.1.1.3 Economic evaluation
• 5.1.2 Project financial costs
• 5.1.2.1 Investment costs
• 5.1.2.2 Operating costs
• 5.1.2.3 Working capital
• 5.1.3 Financial benefits of the project
• 5.2 Least-cost solution
• 5.2.1 Present value method
• 5.2.2 Annual cost method (equivalent uniform annual cost method)
• 5.2.3 Levelised cost of electricity
• 5.3 Measuring worth of the investment
• 5.3.1 Internal rate of return
• 5.3.2 Net present value
• 5.3.3 Benefit/cost ratio
• 5.3.4 Other non-discount criteria for evaluation
• 5.3.4.1 Payback period
• 5.3.4.2 Profit/investment ratio
• 5.4 Owner's evaluation of profitability: commercial annual rate of return
• 5.5 Independent power producers
• References