do all

Livonia Corp. is pondering a factory overhaul that will cost $600,000 this year (2020) and disrupt production while the overhaul is occurring. This disruption will cost the firm $400,000 in contribution margin this year. Starting in 2021, Livonia will benefit from the overhaul by seeing its variable cost per unit fall by 20%. Annual fixed costs will increase for maintenance ($100,000 the first year increasing by $50,000 each year thereafter) and $150,000 for depreciation (same every year). Absent an overhaul, the factory produces 2 million units per year at variance cost of $3 per unit, fixed cost of $2.5 million, with the output sold for $5 per unit. After an overhaul, the company would intend to cut the price to $4.50 per unit, enabling the firm to produce and sell 2.6 million units annually. The factory is old and is expected to be shut down at the end of 2024 regardless of the overhaul decision. The factory would then be sold to another firm. Without an overhaul, the sale price for the factory would be $2 million. With an overhaul, the sale price for the factory would be $2.3 million. Calculate the appropriate amount to include in an NPV calculation for 2020. (Not the present value, but the punt that would be present valued.) Give the answer as a number of $ million. Answer: Calculate the appropriate amount to include in an NPV calculation for 2021. (Not the present value, but the amount that would be present valued.) Give the answer as a number of $ million. Answer: Calculate the appropriate amount to include in an NPV calculation for 2022. (Not the present value, but the amount that would be present valued.) Give the answer as a number of $ million Answer: Calculate the appropriate amount to include in an NPV calculation for 2023. (Not the present value, but the amount that would be present valued.) Give the answer as a number of $ million. Answer: Calculate the appropriate amount to include in an NPV calculation for 2024. Not the present value, but the amount that would be present valued.) Give the answer as a number of $ million. Answer: Answer: Notwithstanding the answers given above, assume the annual amounts were as follows: 2020: -2 million 2021: 1 million 2022: 1.1 million 2023: 1.2 million 2024: 1.3 million Assume the cost of capital is 15%. Calculate the NPV of the overhaul. Report it as a number of $ million. Answer: Next