Reference no: EM131312387
We are examining a new project. We expect to sell 5,300 units per year at $67 net cash flow apiece for the next 10 years. In other words, the annual operating cash flow is projected to be $67 × 5,300 = $355,100. The relevant discount rate is 16 percent, and the initial investment required is $1,520,000. After the first year, the project can be dismantled and sold for $1,240,000. Suppose you think it is likely that expected sales will be revised upward to 8,300 units if the first year is a success and revised downward to 3,900 units if the first year is not a success.
a. If success and failure are equally likely, what is the NPV of the project? Consider the possibility of abandonment in answering. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
NPV $
b. What is the value of the option to abandon? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Option value $
|
Analyze next-generation sequencing data
: Comp 7/ Bio 40 Project: Reliability of Metagenomics Reads. We are going to focus on the most specific level of taxonomic classification reported by our software, the genus level. In this assignment, you will analyze next-generation sequencing data ..
|
|
Problems with job based pay structures
: Explaining each 5 problems from your own point of view.- Provide at least one example for each problem from any existing activity or practice.
|
|
Business research report proposal
: Identify a business research topic - Define the research questions for the identified problem or opportunity and select the appropriate research methodologies and techniques to use for the research project
|
|
Would you expect the overhead rates
: One of the most common reasons for not wanting to adopt a matrix is the excessive administrative costs and accompanying overhead costs. Would you expect the overhead rates to decrease as the matrix matures?
|
|
What is the value of the option to abandon
: We are examining a new project. We expect to sell 5,300 units per year at $67 net cash flow apiece for the next 10 years. In other words, the annual operating cash flow is projected to be $67 × 5,300 = $355,100. The relevant discount rate is 16 perce..
|
|
Four-year project to improve its production efficiency
: Massey Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $520,000 is estimated to result in $215,000 in annual pretax cost savings. The press also requires an initial investment in sp..
|
|
About the savings per month
: You want to be a millionaire when you retire in 35 years. How much do you have to save each month if you can earn an annual return of 11.2 percent? How much do you have to save each month if you wait 10 years before you begin your deposits?
|
|
What is yield to maturity of bond and current yield
: Suppose the following bond quotes for IOU Corporation appear in the financial page of today’s newspaper. Assume the bond has a face value of $2,000 and the current date is April 19, 2015. What is the yield to maturity of the bond. What is the current..
|
|
Discounted payback period of this proposed investment
: A 2,000 square foot house in Delaware costs $1725 to heat each winter with the existing oil burning furnace inside the home. For an investment of $5,000, a natural gas furnace can be installed, and the winter heating bill is estimated to decrease to ..
|