MAKE OR BUY DECISIONS. Your boss tells you to build a certain number of cars, and your job is to find the most cost-effective way to do it using NPV. Use a calculator to do the math after writing out the proper formula. Round to the nearest penny ($0.01). you build cars using an existing U.S. plant, you expect cash flows at times 0, 1, 2, and 3 of 200, 200, 200, and 200, and the discount rate is 10%. Find the NPV. b. If you build a new plant in Mexico, your expected cash flows will be –1000, +400, +500, and +600, but it's a little riskier, so r=12%. Find the NPV. а. If c. If you acquire an existing plant in Mexico, cash flows should be -500, +300, +400, +500. Find NPV if this project has moderate risk and a discount rate of r=11%.
MAKE OR BUY DECISIONS. Your boss tells you to build a certain number of cars, and your job is to find the most cost-effective way to do it using NPV. Use a calculator to do the math after writing out the proper formula. Round to the nearest penny ($0.01). you build cars using an existing U.S. plant, you expect cash flows at times 0, 1, 2, and 3 of 200, 200, 200, and 200, and the discount rate is 10%. Find the NPV. b. If you build a new plant in Mexico, your expected cash flows will be –1000, +400, +500, and +600, but it's a little riskier, so r=12%. Find the NPV. а. If c. If you acquire an existing plant in Mexico, cash flows should be -500, +300, +400, +500. Find NPV if this project has moderate risk and a discount rate of r=11%.
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
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Transcribed Image Text:3. MAKE OR BUY DECISIONS. Your boss tells you to build a certain number of cars, and your job is
to find the most cost-effective way to do it using NPV. Use a calculator to do the math after writing
out the proper formula. Round to the nearest penny ($0.01).
you build cars using an existing U.S. plant, you expect cash flows at times 0, 1, 2, and 3 of 200,
200, 200, and 200, and the discount rate is 10%. Find the NPV.
b. If you build a new plant in Mexico, your expected cash flows will be –1000, +400, +500, and
+600, but it's a little riskier, so r=12%. Find the NPV.
If you acquire an existing plant in Mexico, cash flows should be -500, +300, +400, +500. Find
NPV if this project has moderate risk and a discount rate of r=11%.
а.
If
с.
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