Information Frage markieren Investment in Working Capital for a Project Highspeed Outboard Motors is contemplating building a new plant. The company anticipates that the plant will require an initial investment of $ 2'110'000 in net working capital today. The plant will last 11 years, at which point the full investment in net working capital will be recovered. Frage 3 Falsch Erreichte Punkte 0,00 von 1,00 Frage markieren a) Given an annual discount rate of 6.4%, what is the net present value of this working capital investment? (Record your result in USD and NOT in million USD.) Antwort: 1066410.83 Ignoring revenues and other expenses associated with the new plant, the NPV of the $2.11 million investment in net working capital is simply the present value of the $2.11 million that the firm will recoup at the end of ten years minus the initial $2.11 million investment. So the NPV of these cash flows is - $1,043,589.17. NPV -$2,110,000+3 $2,110,000 (1.064)" ---$1,043,589.17. Frage 4 Falsch Erreichte Punkte 0,00 von 1,00 Frage markieren b) What is the value of an inventory policy that would halve the plant's net working capital requirement? (Record your result in USD and NOT in million USD.) Antwort: 3 Although Highspeed Outboard Motors receives back all of its investment in working capital, it loses the time value of money on its cash. If a new inventory period could halve this requirement it would be worth $1,043.589.17/2 = $521,794.59