Ford factory wants to produce twin carburetor with a preliminary investment of $10million pounds. Jack predict...

Ford factory wants to produce twin carburetor with a preliminary investment of $10million pounds. Jack predict that an additional investment of $4 million pounds will beneeded every 3 years to modernize the factory. This factory is anticipated to start producing carburetor 2 years after the first investment is made (at the start of the third year). Incomes of $5million pound per year are estimated to start to flow at the start of the fourth year. Operating and maintenance costs are anticipated to be $2 million pound per year. This factory has a 15 year life.a) Draw cash flow diagram.b)Determine the NPV of the factory with the interest rate is 10% per year, compounded yearly?c) Is the factory defined in the problem an economically suitable investment?

Expert Solution

Rahul Sunny answered 1 year ago

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