NPV of the project = Present value of cash inflows – Present value of cash outflows
= 4.78 million*PVAF(7.9%, 3 years) – 8.19 million
= 4.78 million*2.5818 – 8.19 million
= $4.15 million
Should be accepted as NPV is positive
The value of the firm will increase by $4.15 million
Your factory has been offered a contract to produce a part for a new printer. The...
Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $5.03 million per year. Your upfront setup costs to be ready to produce the part would be $7.97 million. Your discount rate for this contract is 8.3%. a. What does the NPV rule say you should do? b. If you take the contract, what will be the change in...
Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $4.95 million per year. Your upfront setup costs to be ready to produce the part would be $8.07 million. Your discount rate for this contract is 8.3%. a. What does the NPV rule say you should do? Dob. If you take the contract, what will be the change in...
Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $481 million per year. Your upfront setup costs to be ready to produce the part would be 58.19 million. Your discount rate for this contract is 7.8% a. What does the NPV rule say you should do? b. If you take the contract, what will be the change in...
Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $4.95 million per year. Your upfront setup costs to be ready to produce the part would be $8.17 million. Your discount rate for this contract is 8.4%. a. What does the NPV rule say you should do? b. If you take the contract, what will be the change in...
Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $4.89 million per year. Your upfront setup costs to be ready to produce the part would be $8.17 millio Your discount rate for this contract is 7.8%. a. What does the NPV rule say you should do? b. If you take the contract, what will be the change in...
Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $5 million per year. Your upfront setup costs to be ready to produce the part would be $8 million. Your discount rate for this contract is 8%. a. What does the NPV rule say you should do? b.If you take the contract, what will be the change in the...
Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $4.98 million per year. Your upfront setup costs to be ready to produce the part would be $7.77 million. Your discount rate for this contract is 7.6 % a. What does the NPV rule say you should do? b. If you take the contract, what will be the change...
Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $ 4.92 million per year. Your upfront setup costs to be ready to produce the part would be $8.07 million. Your discount rate for this contract is 8.4%. a. What does the NPV rule say you should do? b. If you take the contract, what will be the change...
Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $ 5.04$5.04 million per year. Your upfront setup costs to be ready to produce the part would be $ 7.93$7.93 million. Your discount rate for this contract is 7.9 %7.9%. a. What is the IRR? b. The NPV is $ 5.08$5.08 million, which is positive so the NPV rule...