Question: I want answer to this question Case study: The Cement Factory A cement factory had recently announced plans to develop a new cement factory in

I want answer to this question

I want answer to this question Case study: The Cement Factory A

Case study: The Cement Factory A cement factory had recently announced plans to develop a new cement factory in Houston County. The plant will be called Houston American Cement, or HAC. The location is ideal for cement making because of the large deposit of limestone in the area. The plant investment, expected to amount to $200 million, has been planned for 2017; however, it is delayed due to the economic downturn in construction. When the plant is completed and operating at full capacity, based upon the projected needs and cost per metric ton, it is possible that the plant could generate as much as $50,000,000 annually in revenue. All analysis will use a planning horizon of 5 years commencing when the plant begins operation. Delays beyond the anticipated implementation year of 2017 will require additional money to construct the factory. Assuming that the cost of money is 10% per year, compound interest, draw the cash ow diagram and determine the following: a) The equivalent investment needed if the plant is built in 2020. b) The equivalent investment needed had the plant been constructed in the year 2013. c) Will the initial investment be recovered over the 5-year horizon with the time value of money considered? d) What is the equivalent future worth of the estimated revenues after 5 years at 10% per year? e) Assume that, due to the economic downturn, the president predicts that the corporation will earn only 4.5% per year on its money, not the previously anticipated 10% per year. What is the required amount of the annual revenue series over the 5-year period to be economically equivalent to the amount calculated in (d)? Hint: Interest rate equals the cost of money

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