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Finozest Solutions is considering setting up a facility to manufacture computers. The manufacturing facility will cost K 1 5 million to build and will have
Finozest Solutions is considering setting up a facility to manufacture computers. The manufacturing facility will cost K million to build and will have the capacity to sell computers a year. Each computer is expected to sell retail for K and the cost of making each computer is expected to be K The fixed costs amount to K per year are expected to be incurred. The business will run for five years, at which time you estimate the market value of the facility to be zero. The discount rate is estimated at and the tax rate is
a Estimate the accounting rate of return expected from his investment.
b Using the net present value technique for project evaluation, advise Finozest solutions on whether they should undertake this project.
c After the release of the latest GDP projections for the country, you now estimate that at the end of years, you could sell the facility for K million. Estimate the breakeven rate for the project.
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