Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Flexible Suite Draft figures The table above shows the estimated outgoings and inflows for the project. All of the above estimates have been prepared in
Flexible Suite Draft figures The table above shows the estimated outgoings and inflows for the project. All of the above estimates have been prepared in terms of present-day cost and prices. Assume that cash flows arise at the end of each period. In addition: - Revenues are expected to rise by 5% in price terms per year from year 1 (start of year 1). - Overheads are expected to rise by 5% per year from year 1 (start of year 1) - The cost of Freeze Module is expected to rise in line with inflation of 5% per year from the beginning of year 1 . - The costs of Technical Adviser, who has come from the US have not been taken into consideration in the forecast and are as follows: Technical Adviser (TA): Will be paid 120 per hour and expected number of hours for TA is 1,400hrs. The rate paid is expected to rise in line with inflation at 5% per year from year 2 and the number of hours is expected to reduce by 4% per year, every year from year 2 onwards. If Robot Limited invests in Flexible Suite, then the discount rate that would be required to assess the NPV would be 10%. Flexible Suite Draft figures The table above shows the estimated outgoings and inflows for the project. All of the above estimates have been prepared in terms of present-day cost and prices. Assume that cash flows arise at the end of each period. In addition: - Revenues are expected to rise by 5% in price terms per year from year 1 (start of year 1). - Overheads are expected to rise by 5% per year from year 1 (start of year 1) - The cost of Freeze Module is expected to rise in line with inflation of 5% per year from the beginning of year 1 . - The costs of Technical Adviser, who has come from the US have not been taken into consideration in the forecast and are as follows: Technical Adviser (TA): Will be paid 120 per hour and expected number of hours for TA is 1,400hrs. The rate paid is expected to rise in line with inflation at 5% per year from year 2 and the number of hours is expected to reduce by 4% per year, every year from year 2 onwards. If Robot Limited invests in Flexible Suite, then the discount rate that would be required to assess the NPV would be 10%
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