Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. bolton fireworks, inc. is considering researching

Bolton Fireworks, Inc. is considering researching and developing a new high-tech fireworks launcher to sell...

80.2K

Verified Solution

Question

Finance

image
Bolton Fireworks, Inc. is considering researching and developing a new high-tech fireworks launcher to sell along side its collection of professional fireworks. If they go forward, a marketing analysis will be implemented immediately at a cost of $50,000 and take a year to complete. If its results are positive ( 80% probability) then Bolton will spend $100,000 to build a prototype launcher. If the marketing results are poor ( 20% probability), then it will abandon the project. It will take a year to build and evaluate the prototype launcher. If the prototype works as hoped (75\% probability) then they will spend $500,000 on purchasing and installing manufacturing equipment. If the prototype doesn't work well (25\% probability) then, of course, the prototype is trash and they will discard it and abandon the project. Once the manufacturing equipment is installed (it will take a year), then cash flows will either be $300,000 per year for 5 years ( 60% probability) or $50,000 per year for 5 years ( 40% probability). Note: these cash flows will start in Year 3 and last through Year 7. Calculate the project's expected NPV. Bolton's cost of capital is 10%. a. $3,970 b. $4,367 c. $4,804 d. $5,285 e. $5,813

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Accounting
1.2K views

Micro Enterprises had the following job order transactions during the month of April. Record the transactions...

General Management
1.2K views

Case Study and Proposal: Each group is responsible to identify a small business and familiarize themselves with...

Basic Math
1.2K views

7 You gave your friend a short term 2 year loan of 43 000 at...

Basic Math
1.2K views

Claire is trying to find the height of a radio antenna on the roof of...

Calculus
1.2K views

Find the indefinite integral 16 tan 16 tan x dx 16 tan x dx

Calculus
1.2K views

The general solution of the differential equationxy' = y + ?x + y for x...

Calculus
1.2K views

Integral 7 O secz tan a

Accounting
1.2K views

You were given data on two potential cost drivers for material handling costs. You run...

Accounting
1.2K views

un minorista compra mercadera de un proveedor con un monto de factura de $9,200. los...

Accounting
1.2K views

Indicate how each of the items listed would be handled when preparing a bank reconciliation...

Accounting
1.2K views

I need the answer as soon as possible Starge Inc. owns 30% of...

Accounting
1.2K views

for crane company the predetermined overhead rate is 70% of direct labor costs during the...