t=0 1 2 Your company has a well established product in the market that will remain in production for the next 4 years. A component change has been identified that will not affect the product performance, but will save $2/unit sold when it is implemented. Marketing has projected unit sales for the next 4 years to be: (8000/year for the next 3 years, 5000 for year 4). A production process investment of $50,000 will need to be made today to implement the change. There is no time delay to implement the change. Assume the interest rate is 4%. Income from cost savings: enter the cash values for each of the time periods (0, 1, 2, 3, and 4). Use positive values for savings and negative values for expenditures. For a particular cash flow diagram, if there is no value to enter at a particular time point, enter the value $0. On the timeline, t-0 is the present time, 1-4 represent the end of year 1, year 2, etc. *Answer must be formatted as as follows $7,000 for cost savings or $7,000 for cost investment. Input Box 1 corresponds to year 0, Box 2 is year 1 and so on.
t=0 1 2 Your company has a well established product in the market that will remain in production for the next 4 years. A component change has been identified that will not affect the product performance, but will save $2/unit sold when it is implemented. Marketing has projected unit sales for the next 4 years to be: (8000/year for the next 3 years, 5000 for year 4). A production process investment of $50,000 will need to be made today to implement the change. There is no time delay to implement the change. Assume the interest rate is 4%. Income from cost savings: enter the cash values for each of the time periods (0, 1, 2, 3, and 4). Use positive values for savings and negative values for expenditures. For a particular cash flow diagram, if there is no value to enter at a particular time point, enter the value $0. On the timeline, t-0 is the present time, 1-4 represent the end of year 1, year 2, etc. *Answer must be formatted as as follows $7,000 for cost savings or $7,000 for cost investment. Input Box 1 corresponds to year 0, Box 2 is year 1 and so on.
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:t=0
2
Your company has a well established product in the market that will remain in production for
the next 4 years. A component change has been identified that will not affect the product
performance, but will save $2/unit sold when it is implemented. Marketing has projected
unit sales for the next 4 years to be: (8000/year for the next 3 years, 5000 for year 4).
A production process investment of S50,000 will need to be made today to implement the
change. There is no time delay to implement the change. Assume the interest rate is 4%.
Income from cost savings: enter the cash values for each of the time periods (0, 1, 2, 3, and
4). Use positive values for savings and negative values for expenditures. For a particular cash
flow diagram, if there is no value to enter at a particular time point, enter the value $0. On
the timeline, t=0 is the present time, 1-4 represent the end of year 1, year 2, etc.
*Answer must be formatted as as follows $7,000 for cost savings or -$7,000 for cost
investment.
** Input Box 1 corresponds to year 0, Box 2 is year 1 and so on.
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