Question: please look at the data. show full work please QUESTION 2 See page 67 problem 10. Compute all cash flows as quarterly, and assume they


please look at the data. show full work please
QUESTION 2 See page 67 problem 10. Compute all cash flows as quarterly, and assume they happen at the end of the quarter. The quarterly discount rate can be taken to be 2%. For example, the first quarter development cost would be (1000000/3), and this would be divided by 1.02 to find the present value. The third quarter development cost is also the same, but it would be divided by 1.0243 (1.02 raised to the power of 3). Do this on a spreadsheet. What is the net present value of the project? 10. Tuff Wheels was getting ready to start its development project for a new product to be added to its small motorized vehicle line for children. The new product is called the Kiddy Dozer. It will look like a miniature bulldozer, complete with caterpillar tracks and a blade. Tuff Wheels has forecasted the demand and the cost to develop and produce the new Kiddy Dozer. The following table contains the relevant information for this project. a Development Cost Estimated Development Time Pilot Testing Ramp-up Cost Marketing and Support Cost Sales and Production Volume Unit Production Cost Unit Price $1,000,000 9 months $200,000 $400,000 $150,000 per year 60,000 per year $100 $170 8% Interest Rate Tuff Wheels also has provided the project plan shown as follows. As can be seen in the project plan, the company thinks that the product life will be three years until a new prod- uct must be created. Project Schedule Year 1 Year 2 Year 3 Year 4 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Kiddy Dozer Q1 Development Pilot Testing Ramp-up Marketing and Support Production and SalesStep by Step Solution
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