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Topic 2 Assignment i Saved Help Save & Exit Submit Check my work 14 Expando, Inc., is considering the possibility of building an additional factory
Topic 2 Assignment i Saved Help Save & Exit Submit Check my work 14 Expando, Inc., is considering the possibility of building an additional factory that would produce a new addition to its product line. The company is currently considering two options. The first is a small facility that it could build at a cost of $5 million. If demand for new products is low, the company expects to receive $9 million in discounted revenues (present value of future revenues) with the small 2 facility. On the other hand, if demand is high, it expects $10 million in discounted revenues using the small facility. The second option is points to build a large factory at a cost of $8 million. Were demand to be low, the company would expect $13 million in discounted revenues with the large plant. If demand is high, the company estimates that the discounted revenues would be $15 million. In either case, the probability of demand being high is 0.30, and the probability of it being low is 0.70. Not constructing a new factory would result in no Book additional revenue being generated because the current factories cannot produce these new products. Hint a. Calculate the NPV for the following: (Leave no cells blank - be certain to enter "0" wherever required. Enter your answers in Print millions rounded to 1 decimal place.) References Plans NPV Small facility $ 4.7 million Do nothing $ 0 million Large facility $ 6.4 million b. The best decision to help Expando is Graw 10:02 PM 75#F Search 7/12/2023 Clear
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