Expando, Inc., is considering the possibility of building an additional factory that would produce a new addition to their produ
ct line. The company is currently considering two options. The first is a small facility that it could build at a cost of $7 million. If demand for new products is low, the company expects to receive $9 million in discounted revenues (present value of future revenues) with the small facility. On the other hand, if demand is high, it expects $14 million in discounted revenues using the small facility. The second option is to build a large factory at a cost of $8 million. Were demand to be low, the company would expect $9 million in discounted revenues with the large plant. If demand is high, the company estimates that the discounted revenues would be $13 million. In either case, the probability of demand being high is .30, and the probability of it being low is .70. Not constructing a new factory would result in no additional revenue being generated because the current factories cannot produce these new products.
a.
Calculate the NPV for the following: (Leave no cells blank - be certain to enter "0" wherever required. Enter your answers in millions rounded to 1 decimal place.)
Plans NPV
Small facility $ million
Do nothing million
Large facility million
b. The best decision to help Expando is
to build the large facility.
to build the small facility.
to do nothing.
2 answers:
You might be interested in
Answer:
negotiated.
Explanation:
You have been working at your job for over a year. Your boss starts offering you new assignments with weekly meetings in order to exchange valuable information regarding the tasks. According to the LMX theory, the influence between you is negotiated.
Answer:
Explanation:
the solution is given in the file attached. I hope it helps you. Thank you
International investments. Could be for just about anything, from land to companies.
Answer:1/2 of an answer is zero
Explain:i dont know how i got it. other people can help you if you get it wrong
Answer:
B
Explanation:
Less competition equals hgiher prices.
