Question
The firm says it can capture 5% of the whole market Table 1 is the data of the consumer arker table 2 is the the
The firm says it can capture 5% of the whole market Table 1 is the data of the consumer arker table 2 is the the firms investment project
Table 1: Consumer electronics market (numbers in millions)
Annual sales revenues | 100,000 |
Annual costs (variable) | 50,000 |
Annual growth in sales/costs | 3% |
Beta of sales and cost cash flows | 1.5 |
Table 2 sets out data on De Facto Cos investment project.
Table 2: De Facto Cos investment project
Investment cost in year 0 | 5.9bn |
Annual fixed costs | 1bn |
Annual sales revenues | 4.5% of total market |
Annual variable cost | 4% of total market |
Working capital | 20% of next years sales |
Duration | 10 years |
b)What is the present value of De Facto Cos future sales revenues?
c)What is the present value of De Facto Cos future variable and fixed costs?
d What is the net present value of De Facto Cos working capital investment?
e) What is the net present value of De Facto Cos total investment in the consumer electronics market?
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