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Whats is the NPV & IRR? (Cash Flow Estimation) Sales price per Unit: $ 150/unit in years 1-4, $ 130/unit in year 5 Variable cost
Whats is the NPV & IRR? (Cash Flow Estimation)
Sales price per Unit: $ 150/unit in years 1-4, $ 130/unit in year 5 Variable cost per unit: $80/unit Annual fixed costs: $500,000 Working capital requirements: There will be as initial working capital requirement of $100,000 just to get production started. Then, for each year, the total investment in net working capital will be equal to 10 percent of the dollar value of sales for that year. Thus, the investment in working capital will increase during years 1 through 3, then decrease in year 4. Finally, all working capital is liquidated at the termination of the project at the end of year 5. The depreciation method: We use the simplified straight-line method over 5 years. It is assumed that the plant and equipment will have no salvage value after 5 years. Thus, annual depreciation is $2,000,000/year for 5 years. Let Y be a uniform random variable over (1, 2, 3) We will define a new random variable X that is dependent on Y as we now explain. Once the experiment to obtain a realization Y = y is done, X will be chosen as a uniform random variable from 1 to y. For example if y is 3, then X is uniform over (1, 2, 3). If y is 2, then X is uniform over (1, 2),and if y is 1, then X is always 1.Find the probability P[X = 2]Step by Step Solution
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