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Capacity expansion problem A state expects the following annual growth in electricity demand during the next ten years. Year 1 2 3 4 5 6

Capacity expansion problem A state expects the following annual growth in electricity demand during the next ten years.

Year 1 2 3 4 5 6 7 8 9 10
Growth (MW) 2 3 1 5 2 3 5 3 2 1

To meet the demand, capacity must be constructed. The cost of capacity as a function of size is shown in the table below.

Size (MW) 1 2 3 4 5
Cost ($ million) 20 38 55 70 80

The discount rate for time value of money calculations is 10%. Find the optimum capacity expansion plan to minimize the present worth of capital expenditures. Complete the DP stage tables for stages n = 10, 9, and 8.

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