Question
You are tasked to perform an analysis of Toto Ltd's manufactureing plant and to present your recommendation on whether the company should open the new
You are tasked to perform an analysis of Toto Ltd's manufactureing plant and to present your recommendation on whether the company should open the new plant or not. if the new plant is opened, it will cost R350 million today and the expected cash flows are shown in the table below. the company required rate of return is 12%.
A. Given the streams of cash flow for Toto's envisaged manaufacturing expansion project and the background information provided below, estimate the discounted payback period of the proposed plan.
B. Given the streams of cash flow for Toto's envisaged manaufacturing expansion project and the background information provided below, estimate the discount payback period of the proposed plan.
C. Given the streams of cash flow for Toto's envisaged manaufacturing expansion project and the background information provided below, estimate the net present value of the proposed plan.
D. Based on your anaysis above, should the company open the new plant? Motivet.
E. Given the streams of cash flow for Toto's envisaged manaufacturing expansion project and the background information provided below, Compute the profitability index of the proposed plan.
Streams of cash flow for Toto's envisaged manufacturing expansion project.
year | cash flow |
0 | -350 000 000 |
1 | 60 000 000 |
2 | 90 000 000 |
3 | 170 000 000 |
4 | 230 000 000 |
5 | 205 000 000 |
6 | 140 000 000 |
7 | 110 000 000 |
8 | 70 000 000 |
9 | -80 000 000 |
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