Firms that take voluntary actions to address the ethical, social, and environmental impacts of its business operations are invol
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Answer:
Net present value 27.792
Explanation:
<u>Sales</u> 2.100 units x 20 net cash flow =<em> $ 42,000 cash flow per year</em>
<u>Present value of the first three years:</u>
C 42,000
time 3 years
discount rate: 0.12
PV $100,876.9133
For year 4 and 5 we need to check for the expected cashflow
<u>We will multiply each outcome by their probability:</u>
1,400 units x $20 per unit x 0.5 chance = 14,000
2,500 units x $20 per unit x 0.5 chance = 25,000
expected return: <em>39,000</em>
<u>present value of these years:</u>
Maturity $39,000.0000
time 4 end of year 4th
rate 0.12
PV 24,785.21
Maturity $39,000.0000
time 5 end of year 5th
rate 0.12
PV 22,129.65
<u>Net present value</u> will be the present value of the cash flow less the investment.
100,877 + 24,785 + 22,130 - 120,000 = 27.792