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pls include excel functions and calculations to help better understand 12. Corporation X produces pens. The corporation is deciding whether to build a new plant,
pls include excel functions and calculations to help better understand
12. Corporation X produces pens. The corporation is deciding whether to build a new plant, for an initial investment of $100,000. The corporation projects to receive cashflows of $10,000 a year for 8 years by selling the output of the plant. Moreover, in year 9 the corporation could decide to convert the plant to produce a new product. The conversion would cost$8,000, and the new product would be sold for the following 40 years, with expected cash inflows per year of $30,000. The required rate of retum for investments in pen production is 10% per year, while the one for investments in the production of new products is 15% per year. Say that you must commit to your decisions today. What would you do today and in year 9 ? How much value can be generated by the plant? ( 5 points) Step by Step Solution
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