Question

The net revenue for a new product will be MYR300K this year, and it will grow...



The net revenue for a new product will be MYR300K this year, and it will grow at 20% per year for 3 years. Then, it will begin dropping by 15% per year. After 7 years, there will be no demand. The first cost to complete design and tooling will be MYR950K. The interest rate is 10%. What is the present worth of the new product?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Present Value of Cash Inflows @ 10%

Year Revenue Present Value
1 300,000.00 272,727.27
2 360,000.00 297,520.66
3 432,000.00 324,567.99
4 518,400.00 354,074.18
5 440,640.00 273,602.77
6 374,544.00 211,420.32
7 318,362.40 163,370.25
      1,897,283.45

Present Worth of New Product

Present Value of Cash Inflows       1,897,283.45
Design and Tooling Cost         950,000.00
Present Worth of new product         947,283.45

Note: I have used the present value factors from excel. If present value factors are provided in your question, then please use the same factors or you can let me know the same in comment section and I will edit your answer accordingly.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Your company introduced a new product line 7 years ago. The annual revenue from that product...
Your company introduced a new product line 7 years ago. The annual revenue from that product line was $4,000,000 per year in Years 0-3 and $5,000,000 per year in Years 4-7. Convert these revenues into an equivalent uniform annual series in Years 1 through 7 (the engineering econ equivalent of the average revenue per year) using an interest rate of 10% per year.
1. For a new product, sales volume in the first year is estimated to be 50,000...
1. For a new product, sales volume in the first year is estimated to be 50,000 units and is projected to grow at a rate of 7% per year. The selling price is $100 and will increase by $10 each year. Per-unit variable costs are $22 and annual fixed costs are $1,000,000. Per-unit costs are expected to increase 4% per year. Fixed costs are expected to increase 10% per year. Develop a spreadsheet model to predict the net present value...
The City of San Antonio is considering various options for providing water in its 50-year plan,...
The City of San Antonio is considering various options for providing water in its 50-year plan, including desalting. One brackish aquifer is expected to yield desalted water that will generate revenue of $4.1 million per year for the first 3 years, after which less production will decrease revenue by 10% per year each year. If the aquifer will be totally depleted in 20 years, what is the present worth of the desalting option revenue at an interest rate of 6%...
A machine costs $750,000 to purchase and will produce $250,000 per year revenue. Annual operating and...
A machine costs $750,000 to purchase and will produce $250,000 per year revenue. Annual operating and maintenance cost is $70,000. The machine will have to be upgraded in year 4 at a cost of $150,000. The company plans to use the machine for 8 years and then sell it for scrap for which it expects to receive $30,000. The company MARR interest rate is 10%. Compute the net present worth to determine whether or not the machine should be purchased?
The Mowbot company wants to add a new product line. This will require spending $800,000 on...
The Mowbot company wants to add a new product line. This will require spending $800,000 on new equipment and tooling. The new product line is expected to sell 1,600 units per year for five years. Each unit will generate $180 in gross profit. At the end of five years, the equipment will be sold for an estimated salvage value of $150,000. The Mowbot company evaluates projects using a MARR of 18%. Use present worth analysis to show whether this is...
The City of San Antonio is considering various options for providing water in its 50-year plan,...
The City of San Antonio is considering various options for providing water in its 50-year plan, including desalting. One brackish aquifer is expected to yield desalted water that will generate revenue of $4.1 million per year for the first 5 years, after which less production will decrease revenue by 10% per year each year. If the aquifer will be totally depleted in 23 years, what is the present worth of the desalting option revenue at an interest rate of 8%...
The City of San Antonio is considering various options for providing water in its 50-year plan,...
The City of San Antonio is considering various options for providing water in its 50-year plan, including desalting. One brackish aquifer is expected to yield desalted water that will generate revenue of $4.1 million per year for the first 5 years, after which less production will decrease revenue by 10% per year each year. If the aquifer will be totally depleted in 21 years, what is the present worth of the desalting option revenue at an interest rate of 9%...
The costs and revenue projections for a new product are estimated. What is the estimated profit...
The costs and revenue projections for a new product are estimated. What is the estimated profit at a production rate of 20% above breakeven? Fixed cost = $516,000 per year Production cost per unit = $191 Revenue per unit = $294 The estimated profit is determined to be
The City of San Antonio is considering various options for providing water in its 50-year plan,...
The City of San Antonio is considering various options for providing water in its 50-year plan, including desalting. One brackish aquifer is expected to yield desalted water that will generate revenue of $4.1 million per year for the first 4 years, after which less production will decrease revenue by 10% per year each year. If the aquifer will be totally depleted in 20 years, what is the present worth of the desalting option revenue at an interest rate of 6%...
The product development group of a high-tech electronics company developed five proposals for new products. The...
The product development group of a high-tech electronics company developed five proposals for new products. The company wants to expand its product offerings, so it will undertake all projects that are economically attractive at the company’s MARR of 14% per year. The cash flows (in $1000 units) associated with each project are estimated. Which projects, if any, should the company accept on the basis of a present worth analysis? Project A B C D E Initial Investment $-200 $-510 $-550...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT