Estimate the npv of terminating the project

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I - An internal accountant has generated "Forecast for the Phay Ding Project" below. You see that the project is likely to destroy value. Your task is to estimate the NPV of terminating the project now, using the grid "Termination Analysis of the Phay Ding Project." The page break previews that you see will cause a one-page per table printout.

II - Scartnoc Inc. has a contract proposal. The customer will buy the entire 1,000 unit productive capacity at price increasing at the PPI. Also, value added and fixed costs increase at the PPI. The challenge is that raw materials are becoming increaseingly rare. Accordingly, the raw material cost inflator is accelerating each year per the table below. The life of the contract and the project is the year before the value added cost + raw material costs exceed the selling price. In addition to the CAPX, year 0 requires an investment equal to 6 months of raw material inventory. That level of inventory, adjusted for cost increases, is maintained through the life, and it is the only working capital item. Depreciation is via the 10-year MACRS. The cost of developing the methodology was $543 over the past 4 years. Your job is to find the NPV of this expansion. Recommend whether to accept, with brief quantitative and qualitative explanation. Be sure to enter you class number. Just hit print for a nice format to hand in.

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Reference no: EM131269868

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len1269868

11/8/2016 1:56:58 AM

I can also attach examples that the professor have provided to guide us through the problems. An internal accountant has generated "Forecast for the Phay Ding Project" below. You see that the project is likely to destroy value. Your task is to estimate the NPV of terminating the project now, using the grid "Termination Analysis of the Phay Ding Project."

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