Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please answer both! Thumbs up! An auto plant that costs $55 million to build can produce a new line of cars that will produce net
Please answer both! Thumbs up!
An auto plant that costs $55 million to build can produce a new line of cars that will produce net cash flow of $20 million per year if the line is successful, but only $3 million per year if it is unsuccessful. You believe that the probability of success is about 50 percent. The auto plant is expected to have a life of 27 years and the opportunity cost of capital is 13 percent. What is the expected net present value of building the plant? Please state your answer in millions and in 2 decimal places 30.20 Correct response: 38.228.2 million If the plant could be sold for $70 million to another automaker in one year if the auto line is not successful, what is the expected net present value of building the plant? Please state your answer in millions and in 2 decimal places, Number million Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $27,000 and will be depreciated straight-line over 7 years to a salvage value of zero. The grill will have no effect on revenues, but will save Johnny's 519,000 in energy expenses. The tax rate is 29 percent What are the operating cash flows in years 1 to 7? Enter your answer below. 14608.6 Correct response: 14,688.5741 if the discount rate is 13 percent, what is the net present value of the grill? Use the correct value for operating cash flow. Enter your answer below Number 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