You belong to a start-up company that is designing and delivering a constellation of nanosatellites (that is,
Question:
You belong to a start-up company that is designing and delivering a constellation of nanosatellites (that is, a system of very small satellites for Earth observation). For each satellite unit, the project development team has produced the following estimate of non-recurring end-ofyear costs to get the mission to the point of launch and early operations in 2026:
- Create the future cash flow series for the projected non-recurring engineering (NRE) project expenditures
- Assuming that inflation is 6%, and create the inflation corrected cash flow series for the NRE expenses.
- Incremental revenues are estimated to be the following, starting in 2026:
2026: $150k; 2027: $350k; 2028 through 2040: $400k. Incremental operating expenses are $10k per year in 2026, and these expenses increase by 5% each year (these estimated amounts do not also have to be corrected for inflation).
Create the cash flow series for the incremental EBIT.
Find NPV @ MARR, IRR, and simple payback. Show your work.
- Is the project worth pursuing? Justify your answer in less than half a page of text.
Macroeconomics Principles Applications And Tools
ISBN: 9780134089034
7th Edition
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez