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Net revenues at an older manufacturing plant will be $2 million this year. The net revenue...

Net revenues at an older manufacturing plant will be $2 million this year. The net revenue will decrease by 15% per year for 5 years, when the assembly plant will be closed (at the end of year 6). If the firm's interest rate is 10%, calculate the PW of the revenue stream. Use excel functions and a table.

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Expert Solution

Year Cash flow Present Value PW
1 2000 0.9091                                            1,818
2 1700 0.8262                                            1,405
2000-(2000*15%)
3 1445 0.7513                                            1,086
1700-(1700*15%)
4 1228 0.683                                                839
1445-(1445*15%)
5 1044 0.6209                                                648
1228-(1228*15%)
6 887 0.5645                                                501
1044-(1044*15%)
Total PW                                            6,296
PW 6.296 million

ekkarill92 answered 1 year ago
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