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Suppose the company you work for purchased a textile mill for $25million 4 years ago. It’s current market value is $20 million, and is estimated to decline exponentially for the foreseeable future following this exponential function: MVN=MV0e-0,2N, where N is the year and MV0 is the present market value. The mill’s estimated revenue is expected to be $5 million by the end of this year and is then forecast to decline by 20% per year due to rising energy and material costs. When should the company abandon the mill? Assume a MARR of 6%.

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Financial Management, Finance

Category:- Financial Management
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