The Transco Company is considering making and supplying computer-controlled traffic- signal switching boxes to be used throughout Arizona. Transco has estimated the market for
The Transco Company is considering making and supplying computer-controlled traffic- signal switching boxes to be used throughout Arizona. Transco has estimated the market for its boxes by examining data on new road construction and on the deterioration and replacement of existing units. The current price per unit is $550; the before-tax manufacturing cost is $450. The start-up investment cost is $250,000. The projected sales and net before-tax cash flows in constant dollars are as follows: If Transco managers want the company to earn a 12% inflation-free rate of return (i') before tax on any investment, what would be the present worth of this project? KNIN UNIVER Period 10 1 2 3 4 5 Unit ales 1,000 1,100 1,200 1,300 1,200 Net Cash Flow in Constant $ -$250,000 100,000 110,000 120,000 130,000 120,000
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Financial Analysis with Microsoft Excel
Authors: Timothy R. Mayes, Todd M. Shank
7th edition
1285432274, 978-1305535596, 1305535596, 978-1285432274
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