Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Applied Nanotech is thinking about introducing a new surface cleaning machine. The marketing department has come up with the estimate that Applied Nanotech can sell
Applied Nanotech is thinking about introducing a new surface cleaning machine. The marketing department has come up with the estimate that Applied Nanotech can sell 16 units per year at $298.000 net cash flow per unit for the next four years. The engineering department has come up with the estimate that developing the machine will take a $14.2 million initial investment. The finance department has estimated that a discount rate of 13 percent should be used. a. What is the base-case NPV? (A negative answer should be Indicated by a minus sign. Enter your answer In dollars, not millions of dollars, e.g., 1,234,567. Do not round Intermedlete calculations and round your answer to 2 decimal places, e.g., 32.18.) Base-case NPV $ -17720.72 b. If unsuccessful, after the first year the project can be dismantled and will have an aftertax salvage value of $10.3 million. Also, after the first year, expected cash flows will be revised up to 21 units per year or to o units, with equal probability. What is the revised NPV? (Enter your answer in dollars, not millions of dollars, e..., 1,234,567. Do not round Intermediate calculations and round your answer to 2 decimal places, e..., 32.16.) Revised NPV $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started