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answer all questions please Break-even cash inflows and risk Boardman Gases and Chemicals is a suppler of highly purifled gases to semiconductor manutacturers. A targe
answer all questions please
Break-even cash inflows and risk Boardman Gases and Chemicals is a suppler of highly purifled gases to semiconductor manutacturers. A targe chip producer han "asked Boardman to build a new gas production faclity close to an existing semiconductor plant. Once the new gas plant is in place, Boardinan wir be the exclusive supptier for that semiconductor fabrication plant for the subsequent 10 yoars. Boordman is considering one of two plant designs. The first is Boardman's "standard" plaat which will cost $38.8 million to build. The second is for a "custom" plant which will cost $52.9 million to build. The custom plant wit allow Boardman to produce the highly specialceed gases required for an emergency semiconductor manutacturing process. Boardman estimates that its client wit order $132 millon of product per year if the itandard plant is constructed, but if the custom design is put in place, Boardman expects to selli $18.3mallion worth of product annualiy to its client. Boardinan has enough money to buld either type of plant, and: in the obsence of risk differences, accepts the project with the highest N.PV. The cost of capital is 16.8%. a. Find the NPVy for each project. Ave the projects acceptable? b. Find the break-even cash inflow for each project. c. The firm has estimated the probabilties of achioving various ranges of cash intlows for the two projects, as shown in the table What is the probublity that each project wit achicve the break-even cash infow found in part (b)? d. Which project is more riaky? Which project has the potentialy Nigher NPrV? Osscuss the risk-ietum trade-ofts of the two projects e. If the fim wished to mirimize losses (that is. NPV $0 to $5 & 0% & 5% \\ $5 to $8 & 10 & 10 \\ $8 to $11 & 60 & 15 \\ $11 to $14 & 25 & 25 \\ $14 to $17 & 5 & 20 \\ $17 to $20 & 0 & 15 \\ Above $20 & 0 & 10 \end{tabular} Step by Step Solution
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