Evaluate the proposal to move the manufacturing facility from China to India (Appendix Q2.1 and Q2.2), using NPV analysis. The evaluation should include a review of the assumptions made that need to be factored into the decision-making process. Note: round the values to the nearest million dollars.

 

Please can you look at what I have so far and correct any mistakes and also how to work out variable costs. Please show workings. Thankyou in advance.

 

Capital grant funding	0	(8)	(8)	(8)	(8)	(8)	(8)
Loan interest	(12)	(12)	(12)	(12)	(12)	(12)	(12)
Overdraft interest	(18)	(18)	(18)	(18)	(18)	(18)	(18)
Savings on distribution	0	5	5	5	5	5	5

 

Sales unit per year (000)		5,655	7,352	9,557	12,424	16,151	20,997
Year	0	1	2	3	4	5	6
	($m)	($m)	($m)	($m)	($m)	($m)	($m)
sales revenue	0	254	330	430	559	725	943
Variable costs
Contribution
Fixed costs	0	(30)	(30)	(30)	(30)	(30)	(30)
Reduced labour costs	0	(25)	(23)	(21)	(19)	(17)	(15)
China facility closure	0	50	0	0	0	0	0
Sale of plant in China	0	0	0	100	0	0	0
Capital exp	(16)	(64)	0	0	0	0	0
Scrap value	0	0	0	100	0	0	0
Net after tax cash flows	(46)	249	277	479	510	678	898
Discount factor at 10% per year	1.00	0.9091	0.8264	0.7513	0.6830	0.6209	0.5645
Present value	(46)	196	202	335	326	400	488
Net present value