Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Tuff Wheels was getting ready to start its development project for a new product to be added to their small motorized vehicle line for

image text in transcribed
image text in transcribed
image text in transcribed
The Tuff Wheels was getting ready to start its development project for a new product to be added to their small motorized vehicle line for children. The new product is called the Kiddy Dozer. It will look like a miniature bulldozer, complete with caterpillar tracks and a blade. Tuff Wheels has forecasted the demand and the cost to develop and produce the new Kiddy Dozer. The table below contains the relevant information for this project. Tuff Wheels also has provided the project plan shown below. As can be seen in the project plan, the company thinks that the product life will be three years until a new product must be created. a. What is the net present value (discounted at 8% ) of this project? Consider all costs and expected revenues. (Enter your answer in thousands of dollars. Round your answer to the nearest thousand.) b. What is the impact on NPV for the Kiddy Dozer if the actual sales are 50,000 per year? $70,000 per year? (Enter your answer in thousands of dollars. Round your answer to the nearest thousand.) c. What is the effect on NPV caused by changing the discount rate to 9%,10%, or 11\%? (Enter your answer in thousands of dollars. Round your answer to the nearest thousand.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Finance

Authors: Harvey S. Rosen

3rd Edition

0256083762, 978-0256083767

More Books

Students also viewed these Finance questions