What is the expected npv for this new machine over 10 years

Reference no: EM13835427

A firm is in the process of assessing the economic prospects for a new bottling maching it is developing. Future research and development expenses could range from 4 to 9 million, with a most likely value around 7 million. The life of the product will be anywhere from 3 to 10 years. Yearly unit sales will range from 100 to 500 with a most likely value around 300. The machines will sell for between $20K and $25K each. The production cost of the machine is expected to be $13K but could be as low as $11K or as high as $15K. Firms discount rate is 10%.

A. What is the expected NPV for this new machine over 10 years.

B. What is the probability of a positive NPV?

Reference no: EM13835427

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