Quick Computing currently sells 13 million computer chips each year at a price of $14 per chip. It is about to introduce a new chip, and it forecasts annual sales of 20 million of these improved chips at a price of $18 each. However, demand for the old chip will decrease, and sales of the old chip are expected to fall to 6 million per year. The old chips cost $7 each to manufacture, and the new ones will cost $11 each. What is the proper cash flow to use to evaluate the present value of the introduction of the new chip? Note: Enter your answer in millions. Cash flow $ 49 million
Quick Computing currently sells 13 million computer chips each year at a price of $14 per chip. It is about to introduce a new chip, and it forecasts annual sales of 20 million of these improved chips at a price of $18 each. However, demand for the old chip will decrease, and sales of the old chip are expected to fall to 6 million per year. The old chips cost $7 each to manufacture, and the new ones will cost $11 each. What is the proper cash flow to use to evaluate the present value of the introduction of the new chip? Note: Enter your answer in millions. Cash flow $ 49 million
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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Transcribed Image Text:Quick Computing currently sells 13 million computer chips each year at a price of $14 per chip. It is about to introduce a new chip, and
it forecasts annual sales of 20 million of these improved chips at a price of $18 each. However, demand for the old chip will decrease,
and sales of the old chip are expected to fall to 6 million per year. The old chips cost $7 each to manufacture, and the new ones will
cost $11 each. What is the proper cash flow to use to evaluate the present value of the introduction of the new chip?
Note: Enter your answer in millions.
Cash flow
$
49 million
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