Urgent! A finance case, (part one)

2008-10-27 8:17 pm
Would someone help me to finish this case that I hv been thinking for whole week. I will deeply appreciate to you.

Case Study (40 marks)
ABC Ltd. is considering a proposal to manufacture a new type of industrial electric motor which would replace most of its existing product line. A research breakthrough has given ABC a two-year lead on its competitors. The proposal is summarized in the table.

You have been asked to evaluate the proposal by taking the following steps:
(a) Read the notes to the table carefully. Which entries make sense? Which do not? Why or why not?
(b) What additional information would you need to construct a version of this table that makes sense?
(c) Construct a table and recalculate NPV. Make additional assumptions as necessary.

Table: Cash flows and present value of ABC proposed investment ($,000)
__________________________2008___2009___2010___2011-2018
1. Capital expenditure_______-10,400
2. Research and development_- 2,000
3. Working capital__________-4,000
4. Revenue________________________8,000___6,000____40,000
5. Operating costs_________________- 4,000___- 8,000___-20,000
6. Overhead_______________________- 800___-1,600____-4,000
7. Depreciation___________________- 1,040___-1,040____-1,040
8. Interest________________________- 2,160___-2,160___-2,160
9. Income________________- 2,000____0_____3,200_____12,800
10. Tax____________________ 0______0______420______4,480
11. Net cash flow_________- 16,000____0_____2,780_____8,320
12. Net present value=13,932

*Pls read part two notes*

回答 (1)

2008-10-30 9:27 am
✔ 最佳答案
Please see my e-mails


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