User Account

All Pages

What is the probability of positive NPV

Assignment Help Financial Management
Reference no: EM13846916

R&D Planning. A firm is in the process of assessing the economic prospects for a new bottling machine it is developing. Future research and development expenses could range from $4 to $9 million, with a most likely value around $7 million. The life of the product will be anywhere from 3 to 10 years. Yearly unit sales will range from 100 to 500, with a most likely value around 300. The machines will sell for between $20,000 and $25,000 each. The production cost of the machine is expected to be $13,000 but could be as low as $11,000 or as high as $15,000. The firm’s discount rate is 10 percent.

a. What is the expected NPV for this new machine over ten years?

b. What is the probability of a positive NPV?

(Powell)

Powell, Stephen G. Simulation Using Spreadsheets Custom eText for University of Alabama - Tuscaloosa. Wiley Custom Select, 7/14/15. VitalBook file.

Reference no: EM13846916

Questions Cloud

Computational rules for deducting casualty losses : When property is disposed of, what factors influence the amount of the deductible loss? Define. What is the importance, if any, of passive activity? Compare and contrast the computational rules for deducting casualty losses on personal-use property w..
Prepare journal entries to record the transactions : Prepare journal entries to record the transactions. Prepare a year-end statement of revenues, expenses,and changes in net position.
Research the difference between static and dynamic ram : Research the difference between static and dynamic RAM. What are the uses of each? How do they store memory. What are the differences between the ways they access data. Create a table comparing static and dynamic RAM
Identify some common miscellaneous itemized deductions : Identify some common miscellaneous itemized deductions and identify any limitations that are imposed on the deductibility of these items.
What is the probability of positive NPV : R&D Planning. A firm is in the process of assessing the economic prospects for a new bottling machine it is developing. Future research and development expenses could range from $4 to $9 million, with a most likely value around $7 million. What is th..
What is the pv : A set of cash flows begins at $50,000 the first year with an increase each year until n= 15. The interest rate is 7%. What is the PV if a. The annual increase is $5,000
Explain the design of computer-based systems : Applies mathematical models to the design of computer-based systems. Applies algorithmic principles and computer science theory to the modeling and design of computer-based systems.
How will the study of psychology enhance your life : Write an essay of 350-500 words that addresses the following: Describe how the current perspectives help accomplish each of the four goals of psychology. What particular issues in psychology are of personal interest to you? How will the study of psyc..
About the current health care reform law : The Health care issue is a great topic of debate between people these days. Conduct research about the current Health Care reform law and how it could affect your personal financial plan?

Reviews

Write a Review

Financial Management Questions & Answers

  Deposit the present value-investment account

Bill O'Blarney tells you that he plans to give you $1 million as a birthday present on your 75th birthday. You are now 25—and a bit skeptical. You suggest that he deposit the present value of this nice gift today in an investment account for you. If ..

  Contribution margin ratio

Winny's Office Furniture has a contribution margin ratio of 16%. If fixed costs are $191,800, how many dollars of revenue must the company generate in order to reach the break-even point?

  What is the firms expected long-term growth rate in earnings

Clothing retailer Abercrombie & Fitch enjoyed phenomenal success in the late 1990s. Between 1996 and 2000, its sales grew almost fourfold, from $335 million to more than $1.2 billion, and its stock price soared by more than 500%. What are the mean an..

  Tax consequences to allie and to broadbill corporation

Allie forms Broadbill Corporation by transferring land (basis of $125,000, fair market value of $775,000), which is subject to a mortgage of $375,000. One month prior to incorporating Broadbill, Allie borrows $100,000 for personal reasons and gives t..

  Impact short-run inflation and output byaltering

Given a firms liabilities an increase in interest rates reduces thefirm's net worth because - difficult to keep inflation and output fromfluctuating when aggregate expenditures change because

  Withdraws the funds on an equal annual basis

Janice Hardin sets aside $5000 each year for 10 years she then withdraws the funds on an equal annual basis for the next 10 years the two tables she should use in the correct order are

  Assume the risk-free rate-market risk premium

AllCity Inc is financed 40% with debt, 10% with preferred stock, and 50% with common stock. Its pretax cost of debt is 6%. Its preferred stock pays an annual dividend of $2.50 and is priced at $30. It has an equity beta of 1.1. Assume the risk-free r..

  About the before-tax analysis

Fairmont Industries primarily relies on 100% equity financing to fund projects. A good opportunity is available that will require $250,000 in capital. The Fairmont owner can supply the money from personal investments that currently earn an average of..

  Interests will company be paying over the five-year period

Double Circle, Inc. just signed a five-year loan agreement to purchase a piece of property. If the property cost was $160,000, what would be the size of each equal semi-annual payment to amortize the loan at an interest rate of 10%? How much interest..

  Cash conversion cycle

Negus Enterprises has an inventory conversion period of 70 days, an average collection period of 42 days, and a payables deferral period of 33 days. Assume that cost of goods sold is 80% of sales. Assume 365 days in year for your calculations. What i..

  What is the stock price at the start of year

Logitech stock is currently selling for $30 per share. The next expected annual dividend is $3 at the end of this year and the dividend growth rate is 6% per year. What is the stock price at the start of year 4 (end of yr 3)?

  Part of business selling modems for network connection

Part of your business is selling modems for network connection. Demand for modems in your store is about 8,000 units per year. Ordering a shipment of modems costs about $500 in processing. A modem costs you $150 and holding a modem in inventory costs..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd