The company, produce in-house in the US; The cost of equipment totals into 32.5 million at...

The company, produce in-house in the US; The cost of equipment totals into 32.5 million at the start of the first year. Which will have a salvage value of 3 million at the end of 6 years. After a recent area 51 raid, the company acquired a team of Area 51 aliens with an annual demand of 500,000. The operational costs and software maintenance is 700,000 annually. As the years go by, an inflation of 16% will demand increasing prices for these values. What will be the net present worth?

Expert Solution

Revenue for first year=51*500000=$25.5mn

Year	Revenue	Salvage	Operational Cost	Net Cash Flow	Present Value (Cash Flow/1.16^year)
0	(32,500,000)	0	0	(32,500,000)	(32,500,000.00)
1	25,500,000	0	700000	24,800,000	21,379,310.34
2	29,580,000	0	812000	28,768,000	21,379,310.34
3	34,312,800	0	941920	33,370,880	21,379,310.34
4	39,802,848	0	1092627.2	38,710,221	21,379,310.34
5	46,171,304	0	1267447.552	44,903,856	21,379,310.34
6	53,558,712	0	1470239.16	52,088,473	21,379,310.34
7	62,128,106	3,000,000	1705477.426	63,422,629	22,440,798.93
				PW (total)	118,216,661.00

Hence, net present worth is $118.2 mn

jeff jeffy answered 5 months ago

A project requires to purchase an equipment with a cost of $1.55 million. The equipment will...

A project requires to purchase an equipment with a cost of $1.55 million. The equipment will be depreciated straight-line to a zero book value over the 9-year life of the project. At the end of the project it will be sold for a market value of $240,000. The project will not change sales but will reduce operating costs by $399,000 per year. The project also requires an initial investment of $52,000 in net working capital, which will be recouped when...

ABC Company wants to produce 1.35 million units per year of a product. Investment cost is...

ABC Company wants to produce 1.35 million units per year of a product. Investment cost is 27.5 million dollars and the project falls under the 7 year MACRS class life with a salvage value of of 2.75 million at the end of 6 years. The average price for each unit is $90. Annual expected sales are shown below. Year. 2020. 2021. 2022. 2023. 2024. 2025 Volume. 600. . 750 1000. 1200. 1200. 1200 Material cost for each unit is $25...

A manufacturer has a fixed cost of $120 million to produce x million of computer chips...

A manufacturer has a fixed cost of $120 million to produce x million of computer chips and estimates its variable cost as $160 for x million compute chips. The manufacturer sells each chip for 165% more than its average cost per chip. a. What is the manufacturer's average cost per x million computer chip? b. What is the manufacturer's price x million computer chips? c. What is the manufacturer's break-even quantity?

You are evaluating the purchase of equipment for a house painting business. The total cost of...

You are evaluating the purchase of equipment for a house painting business. The total cost of the equipment is $27,000. You paid a consultant $1,000 to estimate the revenues expected from the equipment. The firm selling the equipment charges $600 for shipping. The project's incremental operating cash flows before taxes will be $12,000 per year for four years. At the end of four years the equipment will have no value and will be scraped. The equipment has a three-year useful...

Green House Tomato Company is considering the purchase of new processing equipment for $1,500,000, with an additional installation cost of $18,000.

Green House Tomato Company is considering the purchase of new processing equipment for $1,500,000, with an additional installation cost of $18,000. The new equipment will result in earnings before interest and taxes of $450,000 per year, and to operate the equipment properly, workers would have to go through an initial training session costing the company $50,000. In addition, because the equipment is extremely efficient, its purchase necessitates an increase in inventory of $90,000. Assume the company uses straight-line depreciation, the...

Your company plans to purchase some new equipment with anestimated cost of $2.00 million two...

Your company plans to purchase some new equipment with an estimated cost of $2.00 million two years from now. Your company earns 5.1% compounded monthly on its savings. How much does the company need to save at the end of each month if it wants to pay cash for this purchase?

Calculate how to prepare 500 mL of 32.5 part per million KOH from a solution 50%...

Calculate how to prepare 500 mL of 32.5 part per million KOH from a solution 50% of KOH with a density of 1.58 g/mL

In a slow year, Deutsche Burgers will produce 3.200 million hamburgers at a total cost of...

In a slow year, Deutsche Burgers will produce 3.200 million hamburgers at a total cost of $4.600 million. In a good year, it can produce 6.200 million hamburgers at a total cost of $6.400 million. a. What are the fixed costs of hamburger production? (Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place.) b. What is the variable cost per hamburger? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c....

A manufacturer is planning to produce and sell a new product. It would cost $20 million...

A manufacturer is planning to produce and sell a new product. It would cost $20 million at Year 0 to buy the equipment necessary to manufacture the product. The project would require net working capital at the beginning of each year in an amount equal to 15% of the year's projected sales; for example, NWC0 = 15%(Sales1). The product would sell for $30 per unit, and believes that variable costs would amount to $15 per unit. After Year 1, the...

In a slow year, Deutsche Burgers will produce 2 million hamburgers at a total cost of...

In a slow year, Deutsche Burgers will produce 2 million hamburgers at a total cost of $3.5 million. In a good year, it can produce 4 million hamburgers at a total cost of $4.5 million. What are the fixed costs of hamburger production? (Enter your answer in millions rounded to 1 decimal place.) What are the variable costs when the firm produces 2 million hamburgers? (Enter your answer in millions.) What is the average cost per burger when the firm...

Question