Kimchi Corporation is thinking about introducing a new surface cleaning machine. The finance department has come up with the following annual after-tax operating cash flows estimation: 50% probability of $3.05 million per year and 50% probability of $6.1 million per year for the next 5 years. Initial cost of investment is around $15 million and a 16% discount rate should be used. i) Calculate the NPV of the project based on the above information.
Kimchi Corporation is thinking about introducing a new surface cleaning machine. The finance department has come up with the following annual after-tax operating cash flows estimation: 50% probability of $3.05 million per year and 50% probability of $6.1 million per year for the next 5 years. Initial cost of investment is around $15 million and a 16% discount rate should be used. i) Calculate the NPV of the project based on the above information.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 15E: Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided...
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