Compute the npv, Operation Management

Expando, Inc., is considering the possibility of building an additional factory that would produce a new addition to their product line. The company is currently considering two options. The first is a small facility that it could build at a cost of $8 million. If demand for new products is low, the company expects to receive $10 million in discounted revenues (present value of future revenues) with the small facility. On the other hand, if demand is high, it expects $11 million in discounted revenues using the small facility. The second option is to build a large factory at a cost of $9 million. Were demand to be low, the company would expect $11 million in discounted revenues with the large plant. If demand is high, the company estimates that the discounted revenues would be $15 million. In either case, the probability of demand being high is .80, and the probability of it being low is .20. Not constructing a new factory would result in no additional revenue being generated because the current factories cannot produce these new products.

a. Calculate the NPV for the following: (Leave no cells blank - be certain to enter "0" wherever required. Enter your answers in millions rounded to 1 decimal place.)

Posted Date: 2/10/2014 11:16:18 PM | Location : United States







Related Discussions:- Compute the npv, Assignment Help, Ask Question on Compute the npv, Get Answer, Expert's Help, Compute the npv Discussions

Write discussion on Compute the npv
Your posts are moderated
Related Questions
Measurement of customer engagement through the feedback process helps the organization in all of the following EXCEPT- discover customer perceptions of how well the organization

1. (a) For the measurement data presented below, draw a frequency histogram using a class width of 0.1 mm; calculate the sample means and superimpose their frequency histogram; com

•Using the Internet, research statistics using PollingReport.com. •Select a topic from either the "In the News" section or the "Issues" section. •Study the data that the Website pr

Discuss how the five Operational Performance Objectives may influence decision-making associated with process design and layouts.

1. Describe in your own words the best leader you ever had and why? Be specific in your answers as to the impact this leader had in your workplace. 2. Describe in your own words

Read the required article "Perfecting Project Management" by Drew Robb. List three ways a project manager could use the data described in the article to keep the project on track a

Evaluate the statement: "In lean operations, when work is completed at one work center, it is important to immediately move the completed work to the next work center to minimize i

Least Cost Methods ( LCM): The NW corner rule describe earlier consider only the availability and supply requirements in making assignments'. It take no according of the shipping

Spencer just learned that his salary is $10,000 more than a co-worker whose job performance is superior to his. Equity theory would predict that Spencer would do any of the followi

Explain today's Transportation unions with examples (trucker, railway, plane).