Starting production would require an investment of $ 300,000 in production equipment. Based on the market research, the company's management expects sales to be 291,200 liters in the first year, after which demand is expected to grow at an annual rate of 5.5%. The average selling price is expected to be significantly higher for the company, at about $ 3.64 / liter. However, the production process requires significantly more, and more expensive raw materials, which are expected to cost about $ 2.16 / liter produced. At start-up, other production-related costs are expected to be approximately $ 254,800 / year.

The average return on capital requirement at Ipana oy at the time of the investment decision is 10%. Prices do not include VAT, corporate tax is 20%. The working capital commitment does not need to be taken into account. The life of the production equipment is estimated to be about five years, during which time it is depreciated on a straight-line basis, after which it can be assumed that the production equipment is unusable and worthless. Evaluate the profitability of the investment over a five-year period (where the investment is made in year 0 and production is ongoing in years 1-5).

Questions:

1. Calculate the minimum price at which production is profitable for a new product. (for the first year). Please enter an answer to two decimal places.
2. Calculate the minimum quantity for which the production is profitable for the new product. (during the first year). Give the answer to the nearest liter.
3. Calculate the% margin for a new product. (during the first year). Please enter an answer with 1 percent accuracy.
4. Calculate the free cash flow for the first year of production. Report the result rounded to the nearest dollars.
5. Calculate the net present value of the investment.Please indicate the answer, rounded to the nearest dollars.
6. Let's live in year 2. Sales volumes were in line with expectations in years 1 and 2, but significantly weaker growth of 3% is forecast for years 3-5. Another company offers to buy the production equipment at the beginning of next year, at a fair price of dollars 180,000 (which coincidentally corresponds to its current value in the balance sheet, i.e. the sale has no tax effect), but on condition that payment is not made until the end of next year. That is, the company can either continue production in a deteriorating situation, or stop production and sell related production equipment. Over the past years, the company's financing structure has changed so that the average return on capital requirement is now 12.2%.: Calculate the net present value of continuing production.Give the answer to the nearest [dollar].
7. Calculate the net present value of the cessation of production. Please indicate the answer, rounded to the nearest dollar.