Find the best option given the following assumptions: Investment 1.000Eur Variable costs x unit 0,4 Price x
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Investment 1.000Eur
Variable costs x unit 0,4 Price x unit 1
Tax rate 40%
Production capacity 1000 un.
Potential demand 900 unit
Fixes costs 150
Depreciation rate 20%
Change in working capital as a percentage of annual sales 10% (variation recovery last year).
Cost of capital: 10%
Asset useful life: 5 years.
At the end of the fifth year the salvage value of the investment is estimated to be 400 . Alternatively the production plant can continue the activity but the estimated cash flows from the sixth year will decrease 20% a year to infinite.
Related Book For
Operations Management Processes And Supply Chains
ISBN: 9781292409863
13th Global Edition
Authors: Lee Krajewski, Naresh Malhotra, Larry Ritzman
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