Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. when the project life will endyou have only 100,00

when the project life will endYou have only 100,000,000 and you cannot raise any additional...

70.2K

Verified Solution

Question

Finance

when the project life will endYou have only 100,000,000 and you cannot raise any additional funds. There are three investment opportunities you can undertake. Opportunity 1: This requires an initial investment at time 0 of 42,000,000. The assets will be depreciated straight line in 5 years. The revenues from sales of the first year are equal to 15,000,000 while the costs for the same year are equal to 6,300,000. Costs will stay constant for the next 10 years while sales will grow at a 4% rate every year until year 6, and then decrease at a 7% rate from year 7 (included) to year 10, when the project life will end. This project requires no working capital and the assets will have zero salvage value. Opportunity 2: This requires 34,000,000 initial investment in fixed assets to be depreciated straight line in 13 years. The investment produces a net cash flow (excluding the initial investment) of 3,000,000 every year for the next 25 years.

When the project life will end? in both opportunities

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