Managerial Economics 13th Edition by James McGuigan,Charles Moyer,Frederick Harris

Exercise 10

Larger-scale turbines increase the electricity more than proportionately to the increase in costs. A 1 megawatt turbine costs $2.6 million, with the remaining equipment costs unchanged, for a total required investment of $4.1 million to power approximately 760 households. Electricity revenue over 15 years rises to $7.2 million in discounted present value. What conversion factor allows cost recovery of this larger-scale turbine