There is a 22% probability of strong growth in the sales of snacks and beverages; a 50% probability of normal growth; and a 28% probability of weak growth. If utilizing 100% of the factory capacity for snacks: strong growth will result in annual returns of $200,000; normal growth will result in annual returns of $150,000; and weak growth will result in annual returns of $120,000. If overhauling the factory to produce beverages: strong growth will result in annual returns of $450,000; normal growth will result in annual returns of $250,000; and weak growth will result in annual returns of $120,000. If utilizing 80% of the factory capacity for snacks: strong growth will result in annual returns of $160,000; normal growth will result in annual returns of $120,000; and weak growth will result in annual returns of $96,000. The minor upgrades would cost $181,000; the plant can continue to operate at current production levels during the upgrades. The increase in factory utilization will only be seen after the upgrades are complete. Upgrades will take 12 months to complete. The complete overhaul would cost $1,205,000, and the plant would need to be shut down for one year for the work to happen. Operating costs for all options are equal and assume an 18% interest rate. 2. Calculate the values of each alternative outcome, considering results over an eight-year period. Show your work in a table format Then, calculate the value of each alternative. Alternative , Revenue , Cost and Value 3. Calculate the net present value of each alternative outcome, considering results over an eight-year period. Show your work in a table format. Then, calculate the value of each alternative using the net present value. Alternative , Revenue , Cos and t Value
There is a 22% probability of strong growth in the sales of snacks and beverages; a 50% probability of normal growth; and a 28% probability of weak growth. If utilizing 100% of the factory capacity for snacks: strong growth will result in annual returns of $200,000; normal growth will result in annual returns of $150,000; and weak growth will result in annual returns of $120,000. If overhauling the factory to produce beverages: strong growth will result in annual returns of $450,000; normal growth will result in annual returns of $250,000; and weak growth will result in annual returns of $120,000. If utilizing 80% of the factory capacity for snacks: strong growth will result in annual returns of $160,000; normal growth will result in annual returns of $120,000; and weak growth will result in annual returns of $96,000. The minor upgrades would cost $181,000; the plant can continue to operate at current production levels during the upgrades. The increase in factory utilization will only be seen after the upgrades are complete. Upgrades will take 12 months to complete. The complete overhaul would cost $1,205,000, and the plant would need to be shut down for one year for the work to happen. Operating costs for all options are equal and assume an 18% interest rate.
2. Calculate the values of each alternative outcome, considering results over an eight-year period. Show your work in a table format Then, calculate the value of each alternative. Alternative , Revenue , Cost and Value
3. Calculate the
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