Answers
Development Cost | $9,50,000 | ||||||||||||||||
Estimated Development Time | 9 | months | |||||||||||||||
Pilot Testing | $2,00,000 | ||||||||||||||||
Ramp-up Cost | $4,00,000 | ||||||||||||||||
Marketing and support cost | $1,50,000 | per year | |||||||||||||||
Sales and Production volume | 60000 | per year | |||||||||||||||
Unit Production cost | $100 | ||||||||||||||||
Unit Price | $175 | ||||||||||||||||
Interest Rate | 8% | 2% | Quarterly | ||||||||||||||
Period (n) | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | |
Project Schedule | Year 1 | Year 2 | Year 3 | Year 4 | |||||||||||||
Kiddey Dozer | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | TOTAL |
Development | -$3,16,666.67 | -$3,16,666.67 | -$3,16,666.67 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Pilot Testing | 0 | 0 | 0 | -$2,00,000 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Ramp-up | 0 | 0 | 0 | -$4,00,000 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Marketing and support | 0 | 0 | 0 | 0 | -$37,500 | -$37,500 | -$37,500 | -$37,500 | -$37,500 | -$37,500 | -$37,500 | -$37,500 | -$37,500 | -$37,500 | -$37,500 | -$37,500 | |
Production | 0 | 0 | 0 | 0 | -$15,00,000 | -$15,00,000 | -$15,00,000 | -$15,00,000 | -$15,00,000 | -$15,00,000 | -$15,00,000 | -$15,00,000 | -$15,00,000 | -$15,00,000 | -$15,00,000 | -$15,00,000 | |
Sales | $26,25,000 | $26,25,000 | $26,25,000 | $26,25,000 | $26,25,000 | $26,25,000 | $26,25,000 | $26,25,000 | $26,25,000 | $26,25,000 | $26,25,000 | $26,25,000 | |||||
Net Cashflow | -$3,16,666.67 | -$3,16,666.67 | -$3,16,666.67 | -$6,00,000.00 | $10,87,500.00 | $10,87,500.00 | $10,87,500.00 | $10,87,500.00 | $10,87,500.00 | $10,87,500.00 | $10,87,500.00 | $10,87,500.00 | $10,87,500.00 | $10,87,500.00 | $10,87,500.00 | $10,87,500.00 | |
PV Factor @ 8% i.e 2% Quarterly (1/1.02^n) | 0.9804 | 0.9612 | 0.9423 | 0.9238 | 0.9057 | 0.8880 | 0.8706 | 0.8535 | 0.8368 | 0.8203 | 0.8043 | 0.7885 | 0.7730 | 0.7579 | 0.7430 | 0.7284 | |
NPV | -$3,10,457.52 | -$3,04,370.11 | -$2,98,402.07 | -$5,54,307.26 | $9,84,982.26 | $9,65,668.88 | $9,46,734.19 | $9,28,170.78 | $9,09,971.35 | $8,92,128.78 | $8,74,636.06 | $8,57,486.33 | $8,40,672.87 | $8,24,189.09 | $8,08,028.52 | $7,92,184.82 | $91,57,317 |
b. | Sales | NPV |
50000 | $73,25,446 | |
70000 | $1,09,89,188 | |
C. | ||
Interest Rate | NPV | |
9% | $89,03,875 | |
10% | $86,58,191 | |
11% | $84,19,996 |
answers for b and c can be obtained by changing cell value of Sales and production volume (B6) and Interest Rate (B9) respectively.
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