Question: what is the information do u need ? 8.16 A different plant from the one described in Problem 8.13 can be built for an initial

 what is the information do u need ? 8.16 A different
what is the information do u need ?
plant from the one described in Problem 8.13 can be built for

8.16 A different plant from the one described in Problem 8.13 can be built for an initial investment of $13 million and no supplemental investments. All other data are the same as in Problems 8.13 and 8.14. (a) Compute the net present value. (b) Is this plant an economically acceptable investment? Ans.(a) +$855 708.47; (b) yes 8.24 What is the NPV of the plant described in Problem 8.16, if the interest rate is 12% per year, compounded annually? Please answer number 8.24 8.13 A new plant to produce tractor gears requires an initial investment of $ 10 million. It is expected that a supplemental investment of $4 million will be needed every 3 years to update the plant. The plant is expected to start producing gears 2 years after the initial investment is made (at the start of the third year). Revenues of $5 million per year are expected to begin to flow at the start of the fourth year. Annual operating and maintenance costs are expected to be $2 million per year. The plant has a 15-year life. List the annual cash flows. Am. CFO = $10 000 000, CFI = CF2 = 0, CF3 = $6 000 000, CF4 = CF5 = CF7 = CFS = CFlo = CFII=CF13 = CF14 = $3 000 000, CF6 = CF9 = CF12 = CFIS = $1000 000 8.14 What is the NPV of the plant in Problem 8.13 if the interest rate is 10% per year, compounded annually? Ans. $5 336 645.33

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