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4.1 Evaluation of Net Present Worth and Revenue <br />Section 3 (Assessment of Generation Capability) estimates, based on a range of capacity of generating <br />units, that the annual revenue as $0.04/Kw-hr is between $50,000 and $95,000. Operations were assumed <br />to require on average 10 hours per week for one person. Assuming 25% time and an estimated annual <br />cost of $60,000, the annual operating costs would be $15,000. Additional operating cost to run the <br />facility would be required but this may be accomplished without adding any other additional staff. <br />Adjusting the annual revenue by deducting $15,000 from the estimated revenues would result in an <br />estimated annual net revenue of $35,000 to $80,000, respectively for the upper and lower estimates. The <br />net present worth of this revenue based on a 5% annual interest rate and a 20-year period is approximately <br />$450,000 and $1,000,000, respectively. The range of net present worth of this revenue over a period of <br />40 years is $600,000 to $1,370,000, since it is not uncommon for hydropower facilities to have a lifespan <br />greater than 40 years. This assessment provides an initial estimate of the limits of the current investment <br />to break even over a 20-year period and a 40-year period, respectively. <br />P:\Mpls\23 MN171\2371089 Elk River Municipal-Orono Dam\WorkFiles\Report\Lake Orono Dam Assessment Report.doc <br />