What is the probability of positive NPV

Assignment Help Financial Management

Reference no: EM13846916

R&D Planning. A firm is in the process of assessing the economic prospects for a new bottling machine 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 $20,000 and $25,000 each. The production cost of the machine is expected to be $13,000 but could be as low as $11,000 or as high as $15,000. The firm’s discount rate is 10 percent.

a. What is the expected NPV for this new machine over ten years?

b. What is the probability of a positive NPV?

(Powell)

Powell, Stephen G. Simulation Using Spreadsheets Custom eText for University of Alabama - Tuscaloosa. Wiley Custom Select, 7/14/15. VitalBook file.

Reference no: EM13846916

Questions Cloud

Computational rules for deducting casualty losses : When property is disposed of, what factors influence the amount of the deductible loss? Define. What is the importance, if any, of passive activity? Compare and contrast the computational rules for deducting casualty losses on personal-use property w..

Prepare journal entries to record the transactions : Prepare journal entries to record the transactions. Prepare a year-end statement of revenues, expenses,and changes in net position.

Research the difference between static and dynamic ram : Research the difference between static and dynamic RAM. What are the uses of each? How do they store memory. What are the differences between the ways they access data. Create a table comparing static and dynamic RAM

Identify some common miscellaneous itemized deductions : Identify some common miscellaneous itemized deductions and identify any limitations that are imposed on the deductibility of these items.

What is the probability of positive NPV : R&D Planning. A firm is in the process of assessing the economic prospects for a new bottling machine it is developing. Future research and development expenses could range from $4 to $9 million, with a most likely value around $7 million. What is th..

What is the pv : A set of cash flows begins at $50,000 the first year with an increase each year until n= 15. The interest rate is 7%. What is the PV if a. The annual increase is $5,000

Explain the design of computer-based systems : Applies mathematical models to the design of computer-based systems. Applies algorithmic principles and computer science theory to the modeling and design of computer-based systems.

How will the study of psychology enhance your life : Write an essay of 350-500 words that addresses the following: Describe how the current perspectives help accomplish each of the four goals of psychology. What particular issues in psychology are of personal interest to you? How will the study of psyc..

About the current health care reform law : The Health care issue is a great topic of debate between people these days. Conduct research about the current Health Care reform law and how it could affect your personal financial plan?

User Account

All Pages