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economic risks. The turnkey risk is the risk inherent in
promising a working facility. The developer’s profit represents
the risk inherent in constructing a facility that cannot be sold
for the price asked by the developer. Insofar as the turnkey fee
and the developer's profit address different components of
reproduction cost, we see no logical reason why they cannot
coexist. We are persuaded that, in the instant case, the turnkey
fee and the developer's profit figure represent different
components of the reproduction cost of the bill of sale assets
and that it was appropriate for Mr. Moody to include both of
those figures in the reproduction cost of those assets. We now
turn to Mr. Moody's computation of the developer’s profit.
In calculating a developer's profit, Mr. Moody looked to
conditions encountered by persons selling hydroelectric
generating assets in the northeastern United States in
December 1987. Mr. Moody determined that an appropriate range
for a developer's profit was 20 to 25 percent; Mr. Moody applied
a developer's profit of 20 percent. We do not believe that
Mr. Moody overstated the developer's profit, and we accept his
calculation of that profit figure.
C. Richard K. Knoll
Mr. Knoll’s written report is coauthored by Martin D. Hanan;
neither Mr. Knoll nor Mr. Hanan is licensed as an appraiser.
Mr. Knoll testified that his recent professional focus has been
in the valuation of intangible assets and intellectual property.
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