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How do we get Net Present Value (111,265) and (124,775)? NTuet Management is trying to decide whother or not to build a new factory. They
How do we get Net Present Value (111,265) and (124,775)?
NTuet Management is trying to decide whother or not to build a new factory. They believe sales are increasing for their products. They have estimated revenues of 585,000 in yoar one, 570,000 in years two through ten. In 10 years the factory is obsolete. They estimate expenses annually to operate the factory alter year 1 would be 535,000 . The cost of the new factory is $400,000. The payments required are $90,000 immediately with the remainder due at completion. The company has hurdle rate of 10%. Use these tables to solvo the problems: a. What is the net present value of this new factory? (Note that if your answer is negative then you need to place oarentheses around it) b. What would the net present value be if the factory only produces goods for 9 years? a) - PV factor for years 2-10 is the different of 10 periods - 1 period for the indicated % * PV factor for years 2-9 is the different of 9 periods - 1 period for the indicated % Step by Step Solution
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