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Hank Auto in Tokyo, Japan is considering the introduction of an electrically powered bike for city use. The bike project requires an initial investment of
Hank Auto in Tokyo, Japan is considering the introduction of an electrically powered bike for city use. The bike project requires an initial investment of 15.6 billion. The cost of capital is 11%. The initial investment can be depreciated on a straight-line basis over the 10-year life of the project. Profits are taxed at a rate of 50%.
Consider the following project estimates:
Market size 1.16 million
Market share .1 Unit price 460,000 Unit
variable cost 420,000
Fixed cost 2.06 billion
A. What is the NPV of the electric bike project?
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