An electronics firm is considering how best to supply the world market for microprocessors used in consumer and industrial elect
ronic products. A manufacturing plant costs approximately $500 million to construct and requires a highly skilled work force. The total value of the world market for this product over the next 10 years is estimated to be between $10 and $15 billion. The tariffs prevailing in this industry are currently low. Should the firm adopt a concentrated or decentralized manufacturing strategy? What kind of location(s) should the firm favor for its plant(s)?
1 answer:
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Answer:
NPV -87,259.64
Explanation:
P0 -100,000
Salvage Value 15,000
operating working capital realese 5,000
We will calculate the present value of the salvage value and the working capital realese
3,177.59
9,532.77
NPV = investment - cash flow discounted
NPV = -100,000 + 9,532.77 + 3,177.59 = -87,259.64