Question

In: Finance

Development cost and timing: $8 million over 2 years Time period 5 years Ramp-up cost: $4...

Development cost and timing: $8 million over 2 years

Time period 5 years

Ramp-up cost: $4 million over 1 year, starting 1st quarter of year 2.

Marketing and support cost: $1.6 million/year, starting 3rd quarter of year 2.

Unit production cost: $550/unit.

Sales and Production volume: 20,000 units/year, starting 3rd quarter of year 2

Discount rate: 3 percent per quarter Unit Price: $1200/unit

1) Using Excel Calculate the NPV for the total period. Calculate the PV for the 1st quarter of the 4th year Calculate the PV for the 2nd quarter of 2nd year What decision (Go or No-Go) will you make for this product based on the NPV? If your development cost were to go up by 25% what is your resulting NPV?

Solutions

Expert Solution

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

(4) Assume, you will receive rent payments over a time period of 88 years. For the...
(4) Assume, you will receive rent payments over a time period of 88 years. For the first 44 years, you will receive a rent of $444 at the end of each year. For the next 44 years thereafter you will receive $222 at the beginning of each year. Assuming a discount rate of 4% calculate the net present value of this income stream. (a) Employing the equation for identical payments over a limited time period, show how you would alter...
Consider the following time series: Period 1, 2, 3, 4, 5, 6, 7, 8 Demand 15,...
Consider the following time series: Period 1, 2, 3, 4, 5, 6, 7, 8 Demand 15, 17, 14, 7, 10, 12, 7, 5 A. using a trend projection, forecast the demand for period 9 b. calculate the MAD for this forecast SHOW ALL WORK! DO NOT USE EXCEL OR PHSTAT!
Explain how the Tesla Cybertruck program could ramp up over the next few years to take...
Explain how the Tesla Cybertruck program could ramp up over the next few years to take significant market-share. Understanding that Tesla’s cars in the United States take approximately 80% market-share for electric vehicles, what is a reasonable assumption for percent market-share for Tesla to take with their Cybertruck? How long will this take?
A company has an investment project that would cost $8 million today and yield a payoff of $10 million in 5 years.
A company has an investment project that would cost $8 million today and yield a payoff of $10 million in 5 years. Complete the following table by indicating if the firm should undertake the project for each of the interest rates listed. Which of the following formulas would help you figure out the exact cutoff for the interest rate between profitability and nonprofitability?
A bond is 4% YTM, coupon 8%, term 5 years semi. It is sold in 2...
A bond is 4% YTM, coupon 8%, term 5 years semi. It is sold in 2 years, calculate the holding period return. If the reinvestment rate is 3%, calculate the total return (MIRR), if it is callable in 2 years at 101, calculate the YTC.
An asset with the first cost of $100,000 is depreciated over a 5-year period. It is...
An asset with the first cost of $100,000 is depreciated over a 5-year period. It is expected to have a $10,000 salvage value at the end of 5 years. (1) Using the straight-line method, what is the net book value at the end of year 2? (2) Using the sum of years digit method, what is the depreciation expense for year 1? (3) Using the double-declining balance method, what is the depreciation expense for year 3? Plz type the answer...
When the stock market is going up over a long period of time, investors can become...
When the stock market is going up over a long period of time, investors can become complacent about the risks of being a stockholder. After the significant decline of the stock market in 2008, people have begun to rethink the risk involved in owning stock. What kinds of risks do the owners of publicly-traded companies face? What could you do, as an investor, to continue to invest in the market but minimize your risk
When the stock market is going up over a long period of time, investors can become...
When the stock market is going up over a long period of time, investors can become complacent about the risks of being a stockholder. After the significant decline of the stock market in 2008, people have begun to rethink the risk involved in owning stock. What kinds of risks do the owners of publicly-traded companies face? What could you do, as an investor, to continue to invest in the market but minimize your risk?
When the stock market is going up over a long period of time, investors can become...
When the stock market is going up over a long period of time, investors can become complacent about the risks of being a stockholder. After the significant decline of the stock market in 2008, people have begun to rethink the risk involved in owning stock. What kinds of risks do the owners of publicly-traded companies face? What could you do, as an investor, to continue to invest in the market but minimize your risk?
You are running with a business since last many years. Over a period of time you...
You are running with a business since last many years. Over a period of time you have very good corporate image in market. But unfortunately since last two years your firm is passing through crisis. Your business is suffering from heavy losses. You are planning to wind up your business. Meanwhile one big corporate house has announced a big corporate deal through auction. You have also decided to take part in that deal as it will be a last option...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT