Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question 4 (5 points) A company has to invest $8 million to buy the copyright of a design to manufacture a kitchen gadget. With a
Question 4 (5 points) A company has to invest $8 million to buy the copyright of a design to manufacture a kitchen gadget. With a light number of sales, the company can expect a return of $1.3 million each year for three years. With a moderate number of sales, the return will be $2.5 million each year for four years and with a high number of sales, a return of $4 million each year for four years. The probability of a high sale number has been estimated to be 0.4 and 0.2 for the probability of light sales. The company uses an interest rate of 15%. Calculate the expected present worth of the investment. On this basis, should the company make the investment or not? Do not forget to submit your work on dropbox. Fill the boxes exactly as the following order: 1. PW of Light sales (No $ sign) 2. PW of Moderate sales (No $ sign) 3. PW of High sales (No $ sign) 4. EPW (No $ sign) 5. 'Yes' or 'No'? A/
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