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I am calculating [12M x .5] + [14M x.5] - 7M = 4M but that is showing incorrect. Help me calculate the missing NPV values.
I am calculating [12M x .5] + [14M x.5] - 7M = 4M but that is showing incorrect. Help me calculate the missing NPV values. Expando, Inc., is considering the possibility of building an additional factory that would produce a new addition to their product line. The company is currently considering two options. The first is a small facility that it could build at a cost of $7 million. If demand for new products is low, the company expects to receive $12 million in discounted revenues (present value of future revenues) with the small facility. On the other hand, if demand is high, it expects $14 million in discounted revenues using the small facility. The second option is to build a large factory at a cost of $12 million. Were demand to be low, the company would expect $12 million in discounted revenues with the large plant. If demand is high, the company estimates that the discounted revenues would be $16 million. In either case, the probability of demand being high is .50, and the probability of it being low is .50. Not constructing a new factory would result in no additional revenue being generated because the current factories cannot produce these new products a. Calculate the NPV for the following: (Leave no cells blank be certain to enter "O" wherever required. Enter your answers in millions rounded to 1 decimal place.) Plans Small facility Do nothing Large facility NPV million 0 million million b. The best decision to help Expando is . to build the small facility to build the large facility to do nothing
I am calculating [12M x .5] + [14M x.5] - 7M = 4M but that is showing incorrect.
Help me calculate the missing NPV values.
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