EBK CONTEMPORARY ENGINEERING ECONOMICS
6th Edition
ISBN: 8220101336736
Author: Park
Publisher: PEARSON
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Chapter 13, Problem 18P
To determine
Calculate the total value of investment.
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Suppose that a new machine tool having a useful life of only one year costs $80,000. Suppose, also, that the net additional revenue resulting from buying this tool is expected to be $92,000. The expected rate of return on this tool is
15 percent.
85 percent.
20 percent.
10 percent.
Now suppose you invest in both a factory and the research for the production of Green jetpacks. Look at the factory and research as a total investment. Calculate the net present value (NPV) before tax on the investment based on the following information:
The investment cost is paid in full in quarter 0, and the cost of the factory is 100000 while the cost of the research is also 100000.
The factory has a lifetime of 20 quarters (5 years) and the value of the factory at the end of quarter 20 is 0
Only green jetpacks should be produced at the factory throughout its lifetime.
There is no investment in research to streamline production or material consumption.
Suppose the quarterly demand in the market is constant and given at P = 338 - 0.018 * Q, where P is price and Q is the number of jetpacks in demand.
There are 5 competitors in the market (including you), and all sell the same number of jetpacks each quarter at the price of 248 each.
You produce as much as you sell.
The costs…
A firm is evaluating an investment proposal which has an initial investment of $8,000 and discounted cash flows valued at $6,000 The net present value of the investment is?
Chapter 13 Solutions
EBK CONTEMPORARY ENGINEERING ECONOMICS
Ch. 13 - Prob. 1PCh. 13 - Prob. 2PCh. 13 - Prob. 3PCh. 13 - Prob. 4PCh. 13 - Prob. 5PCh. 13 - Prob. 6PCh. 13 - Prob. 7PCh. 13 - Prob. 8PCh. 13 - Prob. 9PCh. 13 - Prob. 10P
Ch. 13 - Prob. 11PCh. 13 - Prob. 12PCh. 13 - Prob. 13PCh. 13 - Prob. 14PCh. 13 - Prob. 15PCh. 13 - Prob. 16PCh. 13 - Prob. 17PCh. 13 - Prob. 18PCh. 13 - Prob. 19PCh. 13 - Prob. 20PCh. 13 - Prob. 21PCh. 13 - Prob. 22PCh. 13 - Prob. 23PCh. 13 - Prob. 24PCh. 13 - Prob. 25PCh. 13 - Prob. 1STCh. 13 - Prob. 2STCh. 13 - Prob. 3STCh. 13 - Prob. 4ST
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