- This topic has 1 reply, 2 voices, and was last updated 1 year ago by
.
- Posts
Hello.
Could you please explain how operating profit (operating margin) was calculated in the respective exercise ant overall explain the whole exercise?Thank you in advance.
Volt wants to set a price to earn an op margin of 40% over its life of a wind station
Lifecycle costs of a wind station – from cradle to graveIt generates 1750 gigawatts per year
Over 20 years of lifeIt has a lifecycle gigawatt cost of $55k
An average op cost of $40k per gigawatt
So that makes it an average non op cost of $15k per gigawattSo if we take the 1750 gigawatts * 20 years = 35k gigawatts over its life
Now lets look at the costs over its life time.
35k gigawatts * $40k of operating cost pa = $1400m
The op margin is therefore $1400m * 40/60 = $933.33m
Take of non operating costs 35k gigawatts * $15k = $525m
Which gives a lifetime profit of $408.33m
- You must be logged in to reply to this topic.