The company Fulanita, S.A., decides to invest in an expansion of the plant to produce a product
Question:
The company Fulanita, S.A., decides to invest in an expansion of the plant to produce a product that has an excellent sale price. The project essentially consists of installing a new parallel plate heat exchanger that has a heat transfer area of 500 m2 and must be built in stainless steel; the operating pressure is approximately 5 bar. The modification to the plant takes a year. For the next year, net income is $75,000, and for the remaining years, net income is $125,000. The project has a duration of 10 years.
1. Is this a full modular cost or cost from scratch investment?
2. Calculate the capital investment.
3. Suppose the result of the previous part is $1,000,000. Draw the diagram of
cumulative project cash flow.
4. What is the approximate time of return of the investment?
Business Statistics a decision making approach
ISBN: 978-0133021844
9th edition
Authors: David F. Groebner, Patrick W. Shannon, Phillip C. Fry