Consider the following information given below: Calculate the NPV of the propose

Question

Consider the following information given below: Calculate the NPV of the proposed polyzone project, if spread in year 4 holds at $1.24 per pound. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) What's the right management decision? The project is acceptable. The project is not acceptable. Calculate the NPV of the proposed polyzone project, if the U.S. chemical company can start up polyzone production at 54 million pounds in year 1 rather than year 2. For year 4, assume the spread in year 3 still applies. (Do not round intermediate calculations. Round your answer to 2 decimal places.) What's the right management decision? The project is acceptable. The project is not acceptable. Calculate the NPV of the proposed polyzone project, if the U.S. company makes a technological advance that reduces its annual production costs to $32.0 million. Competitors' production costs do not change. For year 4, assume the spread in year 3 still applies. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Explanation / Answer

B1

C1

1 2 3 4 5 6 7 8 9 10 Investment 100 Production 0 54 108 108 108 108 108 108 108 108 108 Spread 1.34 1.34 1.34 1.34 1.24 1.09 1.09 1.09 1.09 1.09 1.09 Net Revenues 0 72.36 144.72 144.72 133.92 117.72 117.72 117.72 117.72 117.72 117.72 Prod. Costs 0 44 44 44 44 44 44 44 44 44 44 Transport 0 18 10 10 10 10 10 10 10 10 10 Other Costs 0 34 34 34 34 34 34 34 34 34 34 Cash Flow -100 -23.64 56.72 56.72 45.92 29.72 29.72 29.72 29.72 29.72 29.72 PV factor 13% 0.884956 0.885 0.885 0.885 0.885 0.885 0.885 0.885 0.885 0.2946 -100 -20.92035 50.195 50.195 40.637 26.301 26.301 26.301 26.301 26.301 8.7552 NPV (at 13%%) = 93.43 Accept project

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.