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Your company is investigating the option to build a new plant. The total cost to build the part will be $3,000,000 $1500,000 must be paid
Your company is investigating the option to build a new plant. The total cost to build the part will be $3,000,000 $1500,000 must be paid to the engineering construction firm today and the remaining $1,500,000 must be paid to the engineering construction form at the end of the 24 meter bid process. The plant will be ready to start operations at the end of the 24 month build proces and can operate for 5 years. Each year the plant operates, your company must take charges of $500000 fta raw materials and labor costs at the beginning of that year. At the end of each year the plant operates ms your company can take a credit for $1.500,000 in sales for the product made and sold that yea Assume your company requires an effective rate of retum on its investments of 15% Le you can use yearly interest rate of 15% in your financial analysis where needed) What is the Net Present Value (NPV) for this project (rounded to nearest thousand dolurs? Year Cash Flow Discount Factor Present Value 0 CO DO PO 1 C1 D1 P1 P2 D2 C2 P3 D3 P4 4 D5 5 P6 2 3 CN) C4 P5 & 822 C5 P7 C6 6 6 D7 P8 C7 D8 7 C8 8 Recall that F=P[1+17
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