A Company decides to invest in a project to make a product over 7 Years. Initial investment cost $1,000,000 to be spread over the first two years with $700,000 in the first year and $300,000 in the second. The plan is to produce products at the following rates: 5000 units in Year 2 10,000 units in Year 3 $10,000 in Year 6 30,000 units in Year 4 $5,000 in Year 7 30,000 units in Year 5 Products will be sold for $50 per unit over the life of the project. Cash Operating Costs will be $60,000 per year for years 2 through 7. Show the Cash flow diagram. Note: Use Compound Factor Tables 5% and 10%
A Company decides to invest in a project to make a product over 7 Years. Initial investment cost $1,000,000 to be spread over the first two years with $700,000 in the first year and $300,000 in the second. The plan is to produce products at the following rates: 5000 units in Year 2 10,000 units in Year 3 $10,000 in Year 6 30,000 units in Year 4 $5,000 in Year 7 30,000 units in Year 5 Products will be sold for $50 per unit over the life of the project. Cash Operating Costs will be $60,000 per year for years 2 through 7. Show the Cash flow diagram. Note: Use Compound Factor Tables 5% and 10%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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3- A Company decides to invest in a project to make a product over 7 Years.
Initial investment cost $1,000,000 to be spread over the first two years with
$700,000 in the first year and $300,000 in the second. The plan is to produce
products at the following rates:
5000 units in Year 2
10,000 units in Year 3 $10,000 in Year 6
30,000 units in Year 4 $5,000 in Year 7
30,000 units in Year 5
Products will be sold for $50 per unit over the life of the project. Cash
Operating Costs will be $60,000 per year for years 2 through 7. Show the Cash flow diagram.
Note: Use Compound Factor Tables 5% and 10%
Transcribed Image Text:3- A Company decides to invest in a project to make a product over 7 Years.
Initial investment cost $1,000,000 to be spread over the first two years with
$700,000 in the first year and $300,000 in the second. The plan is to produce
products at the following rates:
5000 units in Year 2
10,000 units in Year 3
30,000 units in Year 4
30,000 units in Year 5
$10,000 in Year 6
$5,000 in Year 7
Products will be sold for $50 per unit over the life of the project. Cash
Operating Costs will be $60,000 per year for years 2 through 7. Show the Cash flow
diagram.
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