Can you solve this for me and Explain? Bank: Using Present Value Dollars You are trying to
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Bank: Using Present Value Dollars You are trying to decide if you should build a factory or simply leave the money in the bank collecting interest. You will use a present-value method to make this evaluation. Assume a discount rate of 4%. It will cost $10M to build the factory and two years of time. Assume that all of the building costs are spent on day-one of construction. Assume the factory will run for 25 years after its completion. In the first five years of operation, it generates $1.5M per year in profit each year in future dollars. In the next five years it generates $2M per year. In the next five years it generates $2.5M per year in profits. In the next five years it generates $1.5M per year in profits. And in the last five years it generates $1m per year in profits. (All of the profits here are given in future dollars.) Factory: Should you build the factory or leave the money in the bank at a 3% interest rate? Show your work to get credit. Use additional page if you need it. P- F (1+d)" Bank: Using Present Value Dollars You are trying to decide if you should build a factory or simply leave the money in the bank collecting interest. You will use a present-value method to make this evaluation. Assume a discount rate of 4%. It will cost $10M to build the factory and two years of time. Assume that all of the building costs are spent on day-one of construction. Assume the factory will run for 25 years after its completion. In the first five years of operation, it generates $1.5M per year in profit each year in future dollars. In the next five years it generates $2M per year. In the next five years it generates $2.5M per year in profits. In the next five years it generates $1.5M per year in profits. And in the last five years it generates $1m per year in profits. (All of the profits here are given in future dollars.) Factory: Should you build the factory or leave the money in the bank at a 3% interest rate? Show your work to get credit. Use additional page if you need it. P- F (1+d)"
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To determine whether you should build the factory or leave the money in the bank we need to calculat... View the full answer
Related Book For
Data Analysis and Decision Making
ISBN: 978-0538476126
4th edition
Authors: Christian Albright, Wayne Winston, Christopher Zappe
Posted Date:
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