Question: Please answer both! Thumbs up! An auto plant that costs $55 million to build can produce a new line of cars that will produce net

Please answer both! Thumbs up!

An auto plant that costs $55 million to build can produce a new line of cars that will produce net cash flow of $20 million per year if the line is successful, but only $3 million per year if it is unsuccessful. You believe that the probability of success is about 50 percent. The auto plant is expected to have a life of 27 years and the opportunity cost of capital is 13 percent. What is the expected net present value of building the plant? Please state your answer in millions and in 2 decimal places 30.20 Correct response: 38.228.2 million If the plant could be sold for $70 million to another automaker in one year if the auto line is not successful, what is the expected net present value of building the plant? Please state your answer in millions and in 2 decimal places, Number million Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $27,000 and will be depreciated straight-line over 7 years to a salvage value of zero. The grill will have no effect on revenues, but will save Johnny's 519,000 in energy expenses. The tax rate is 29 percent What are the operating cash flows in years 1 to 7? Enter your answer below. 14608.6 Correct response: 14,688.5741 if the discount rate is 13 percent, what is the net present value of the grill? Use the correct value for operating cash flow. Enter your answer below Number

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Consider the organization you now work in, or if you are not currently employed, consider your last employer. What three words or phrases would you use to describe the company or department culture?...

An auto plant that costs $55 million to build can produce a new line of cars that will produce net cash flow of $25 million per year if the line is successful, but only $6.5 million per year if it is...

1. 2. Daily Enterprises is purchasing a $12,000,000 machine. The machine will be depreciated using straight-line depreciation over its 7 year life and will have no salvage value. The machine will...

i need answer for second question An auto plant that costs $90 million to build can produce a new line of cars that will produce net cash flow of $20 million per year if the line is successful, but...

An auto plant that costs $55 million to build can produce a new line of cars that will produce net cash flow of $45 million per year if the line is successful, but only $9 million per year if it is...

An auto plant that costs $55 million to build can produce a new line of cars that will produce net cash flow of $40 million per year if the line is successful, but only 57 million per year if it is...

A silver mine can yield 20,000 ounces of silver at a variable cost of $38 per ounce. The fixed costs of operating the mine are $50,000 per year. In half the years, silver can be sold for $54 per...

An auto plant that costs $55 million to build can produce a new line of cars that will produce net cash flow of $30 million per year if the line is successful, but only S4 million per year if it is...

Problem 10-25 Project Options (LO4) An auto plant that costs $220 million to build can produce a line of flexfuel cars that will produce cash flows with a present value of $280 million if the line is...

Q10 A silver mine can yield 15,000 ounces of silver at a variable cost of $36 per ounce. The fixed costs of operating the mine are $45,000 per year. In half the years, silver can be sold for $52 per...

Consider 1.0 kg of austenite containing 1.15 wt% C, cooled to below 727C (1341F). (a) What is the proeutectoid phase? (b) How many kilograms each of total ferrite and cementite form? (c) How many...

Write a formal letter: Topic: " You wish to compete in an international Art competition. Write to an organization concerned requesting any information."

That ability to convert shares of stock into cash quickly and at their value is an expression of

On 1 March 2007 DB Limited issued R560 000 15% debentures at R98. The debentures were to be redeemed at par in four equal annual payments starting 28 February 2010. Required: Journalise the above...