Calculate the revenue - operating cost, Financial Management

Chrysler decides to avoid the problems associated with exporting autos to Japan by building a plant in Japan. The cost is expected to be $1 billion with $500 million to be spent now and the remaining to be spent at the end of year 3. The plant will be placed in service on January 1 of year 4 and will be in operation, once placed in service, for a total of 30 years. During its 30 years of operations, operating costs are expected to be $150 million each year. Salvage value will be negligible. How much revenue must this plant generate annually during its 30-year operating life to cover all costs, i.e. the cost of building the plant and operating costs? Chrysler uses a 10% required return. Assume no taxes for this analysis.

Posted Date: 3/2/2013 3:06:04 AM | Location : United States

Related Discussions:- Calculate the revenue - operating cost, Assignment Help, Ask Question on Calculate the revenue - operating cost, Get Answer, Expert's Help, Calculate the revenue - operating cost Discussions

Write discussion on Calculate the revenue - operating cost
Your posts are moderated
Related Questions
Illustration  Vishal Mehta & Co., Mumbai issued 7%, 5-year bond on 31st December 2006. The par value of a bond is Rs. 100. This bond pays interest annually and

Q. Determine the financial requirements of the business ? Decisive the Financial Needs: - The initial task of the financial management is to estimate and determine the financia

Researchers found that it is extremely difficult to forecast the future exchange rates more precisely than the forward exchange rate or the current spot exchange rate. How would yo

A holder in debt obligation, though does not have any opportunity to share in the economic growth of the firm, is interested in a firm's profitability because it

Evaluate the importance of leverage of financial management on a small scale company.

Explain contingent exposure and define the advantages of using currency options to manage this type of currency exposure. Answer: Companies may come across a state where they m

Why are most futures positions closed out through a reversing trade rather than held to delivery? Answer:  In forward markets, almost 90% of all contracts that are basically es

Under what circumstances will the foreign subsidiary’s financial structure become relevant? The subsidiary’s own financial structure will become applicable when the parent firm

A mortgage may be defined as a pledge of property to secure a debt payment; in this context, we will use the term property to mean real estate. If the

the stock of akpan ltd performs well during recessionary periods, and the stock of okon ltd does well during growth periods. both stocks are currently selling for Rs 100 per share