Homework Answers
Cash flow =Units sales per month *(price per unit - cost per unit )
Current policy= 2300*(56-32)= 2300*24
= 55200
New policy = 2425*(58-32)
= 2425*(26)= 63050
Incremental cash flow = New policy - current policy
=63050-55200= 7850
NPV=. incremental cash flow / required return -(price per unit * current sales unit + cost per unit ( new policy sales unit - current policy sales units)
= 7850/1.40% - (56*2300 + 32( 2425 -2300)
= 560714.2850 - ( 128800 + 4000)
=560714.2850 - 132800
= 427194.28
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