Assume that you are the project manager for the development of a radio-controlled mini excavator at the newly started company RadioGräv AB. The estimated development time is 3 years and the project budget is SEK 8 million. The project must not be delayed because you suspect that an established company is planning to develop a competing product. The price on the market is estimated to be SEK 180,000 + VAT. Production of spare parts, operator manuals and service manuals are also included. Expected sales when the project is completed, ie from year 4 is estimated to be: Year 4: 40 units, Year 5: 80 units, Year: 6: 100 units and then a stable sale of 100 units / year. The discount rate is 6%.

What is the present value of the project after 5 years? Clearly show your assumptions and calculations.

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