Essay Upstate NY Nuclear Facility is Considering Closing – Economics Assignment Help

Assignment Task

 

Homework –

Recently it has been reported in the news that an upstate NY nuclear facility is considering closing:
The James A. FitzPatrick nuclear facility outside of Syracuse has been struggling financially, and plant operator Entergy will make a decision on its fate by the end of this year, Entergy CEO Leo Denault said Thursday. FitzPatrick, located in Oswego, employs 600 people and contributes about $17 million in annual tax payments to local municipalities, including nearby school districts and towns. “Low commodity prices and continuing challenges with the market structure in New York are a significant business concern and as such, we are evaluating whether to move forward with the next refueling outage at the FitzPatrick nuclear power plant,” Denault said at the Barclays CEO Energy-Power Conference in New York City.

In particular, the low price of electricity has made the FitzPatrick plant a money loser. Nuclear power is characterized by relatively high fixed costs, but relatively low variable costs (the nuclear plant is extremely expensive to build, but once constructed the operating costs are low). Use the following information to answer the question below:
The capacity of the plant is 7 million megawatt-hours of electricity per year.
The price of electricity is $15 per megawatt-hour.
The cost to build FitzPatrick was $1 billion. FitzPatrick financed the entire amount in a manner that it will pay $50 million per year indefinitely (an effective interest rate of 5%).
Nuclear plants operate most efficiently at full capacity. To operate FitzPatrick at full capacity requires hiring 600 full time workers at $60 million per year; plus maintenance expenditures of $10 million per year; plus $20 million in fuel costs.
You may assume that all of the prices and costs above will be constant for the foreseeable future.
If FitzPatrick were put up for auction, what is the most it would logically sell for? Please explain.

Toyota is the world’s largest producer of automobiles. Toyota purchases all of its steel from steel producers. Some steel producers make large profits, while much of the steel industry is perfectly competitive. Toyota is considering vertically integrating into steel production. TFU and explain: Given that Toyota goes ahead and purchases a steel producer, Toyota would be better off to purchase one of the steel producers making large profits.
Forbes magazine estimates that 46% of all paid car rides in major U.S. cities are conducted through Uber. Uber’s market cap, as determined through its latest equity offering, is $62billion. Though Uber is by far the largest ride-share company is not alone in ride-sharing – in addition to Uber are Lyft, Sidecar, and Curb. Uber is approximately 7 times larger than its nearest rival, Lyft. To operate a successful ride-sharing program requires good computer code, drivers, and riders. Drivers and riders are not bound to a single firm, but there is some learning by doing that gives some benefit to the operation that is used most frequently. Based on the structure of the ride-sharing industry, is there any reason to believe that Uber will be able to make elevated long run profits? Please explain. 
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