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I) You are proposing a new plastic product. The material and energy costs for cach part is expected to be S0.05 and the part

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1 B C D E F G H I J K L M
2 Year Item Number of Units Rate Hours Cash Outflow Total Cash Outflow for Each Year Present Value of the Cash Outflow for Each Year Cash Inflow Total Cash Inflow for Each Year Present Value of the total Cash Inflow for each Year Profit for Each = Total Cash Inflow - Total Cash Outflow for Each Year
3 Year 1 Engineering Time 125 500 62500 62500 54945.05495 0 0 0 -62500
4 Production Time 75 0 NA
5 Unit Sales 0 NA
6 Year2 Engineering Time 125 10 1250 24800 19166.7673 375000 289820.07 350200
7 Production Time 75 200 15000
8 Q & A Testing 90 95 8550
9 Equipment Unit Sales 500000 0.75 375000
10 Year 3 Engineering Time 100 100 10000 225000 152872.1249 750000 509573.7495 525000
11 Manufacturing Time 75 2200 165000
12 Manufacturing Equipments
13 Manufacturing Materials 1000000 0.05 50000
14 Equipment Unit Sales 1000000 0.75 750000
15 Year 4 Manufacturing 75 2200 165000 215000 128420.0512 750000 447976.9227 535000
16 Manufacturing Materials 1000000 0.05 50000
17 Unit Sales 1000000 0.75 750000
18 Year 5 Manufacturing 75 2200 165000 215000 112896.7483 750000 393825.8661 535000
19 Manufacturing Materials 1000000 0.05 50000
20 Unit Sales 1000000 0.75 750000
21 Total 468300.7465 Total 1641196.608
22 Net Present Value or NPV at Year Five 1172895.862

Formula

1 B C D E F G H I J K L M
2 Year Item Number of Units Rate Hours Cash Outflow Total Cash Outflow for Each Year Present Value of the Cash Outflow for Each Year Cash Inflow Total Cash Inflow for Each Year Present Value of the total Cash Inflow for each Year Profit for Each = Total Cash Inflow - Total Cash Outflow for Each Year
3 Year 1 Engineering Time 125 500 =E3*F3 =G3 =H3/(1+0.1375) 0 0 0 =K3-H3
4 Production Time 75 0 NA
5 Unit Sales 0 NA
6 Year 2 Engineering Time 125 10 =E6*F6 =SUM(G6:G8) =H6/((1+0.1375)^2) =J9 =K6/((1+0.1375)^2) =K6-H6
7 Production Time 75 200 =E7*F7
8 Q & A Testing 90 95 =E8*F8
9 Equipment Unit Sales 500000 0.75 =D9*E9
10 Year 3 Engineering Time 100 100 =E10*F10 =SUM(G10:G13) =H10/((1+0.1375)^3) =J14 =K10/((1+0.1375)^3) =K10-H10
11 Manufacturing Time 75 2200 =E11*F11
12 Manufacturing Equipments
13 Manufacturing Materials 1000000 0.05 =D13*F13
14 Equipment Unit Sales 1000000 0.75 =D14*E14
15 Year 4 Manufacturing 75 2200 =E15*F15 =SUM(G15:G16) =H15/((1+0.1375)^4) =J17 =K15/((1+0.1375)^4) =K15-H15
16 Manufacturing Materials 1000000 0.05 =D16*F16
17 Unit Sales 1000000 0.75 =D17*E17
18 Year 5 Manufacturing 75 2200 =E18*F18 =SUM(G18:G19) =H18/((1+0.1375)^5) =J20 =K18/((1+0.1375)^5) =K18-H18
19 Manufacturing Materials 1000000 0.05 =D19*F19
20 Unit Sales 1000000 0.75 =D20*E20
21 Total =SUM(I3:I20) Total =SUM(L3:L20)
22 Net Present Value or NPV at Year Five =L21-I21
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