Find present value of the maintenance costs

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You are thinking of making an investment in a new factory. The factory will gener- ate revenues of $1.71 million per year for as long as you maintain it. You expect that the maintenance costs will start at $97,470 per year and will increase 5% per year thereafter. Assume that all revenue and maintenance costs occur at the end of the liw bed year. You intend to run the factory as long as it continues to make a positive cash no worldisflow (as long as the cash generated by the plant exceeds the maintenance costs). The so factory can be built and become operational immediately and the interest rate is 6% isiThe 3 per year. orgvdishinemodule bluewpholdsallthe eidT .ngizob svilein's a. What is the present value of the revenues? I ni svidsinge a eird job. What is the present value of the maintenance costs? orif onIT ba c. If the plant costs $17.1 million to build, should you invest in the factory?

Reference no: EM133115913

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