Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
A company is considering expanding its operations to also provide the delivery function. The total cost of the electric delivery vans will be $4,750,000 and
A company is considering expanding its operations to also provide the delivery function. The total cost of the electric delivery vans will be $4,750,000 and it is expected they will be used for 3 years. At the end of 3 years, it is estimated the delivery vans will be sold for $1,600,000. A one-off purchase of $300,000 for a charging station for electric vehicles will be required at the time of purchase. The annual maintenance cost per vehicle will be $100,000 as per the agreement. It is estimated additional labour, training, and administration costs will be $3,750,000 each year but annual savings in the transportation costs paid to outside suppliers are expected to be $2,500,000. Additional revenue of $2,300,000 will be generated from customers because of this service. Assume a discount rate of 8% and all cash flows occur at the end of each year. Ignore any tax implications. Required i) Calculate the net present value and provide a recommendation to management as to whether the project should proceed (3 marks) ii) Stakeholder grid is a very popular tool used in stakeholder management. outline the benefits offered by this tool. (2 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started