The manufacture of herbal health tonic is a competitive, Ask an Expert

Finance

The manufacture of herbal health tonic is a competitive industry. The manufacturing facilities have an annual output of 100,000 gallons. Operating costs are $2 per gallon. A 100,000-gallon capacity plant costs $500,000 to build and has an indefinite life, with no salvage value. The cost of capital is 20% (assume no taxes). Your company has discovered a new process that lowers the operating cost per gallon to $1.00. Assuming that the competition will catch up in five years and the market demand is sufficiently high, what is the net present value of building a new plant with new technology?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91000709

Have any Question?Write your Review or question?

Related Questions in Basic Finance

Explain why a common stock should be evaluated in a

Explain why a common stock should be evaluated in a portfolio context as opposed to being evaluated in isolation.

You have a portfolio of 5 stocks that have a total value of

You have a portfolio of 5 stocks that have a total value of $40,000. The beta coefficient of this portfolio is 1.2. You want to invest an additional $10,000 in a stock that has beta equal to 2.2. After adding this, what ...

A firm has sales of 3540000 costs of 3260000 interest

A firm has sales of $3,540,000, costs of $3,260,000, interest expense of $70,000, and a tax rate of 28%. The firm paid $95,000 in cash dividends. What is the addition to retained earnings for the period?

If the rate of inflation is 43 what nominal interest rate

If the rate of inflation is 4.3%?, what nominal interest rate is necessary for you to earn a 2.8 %real interest rate on your? investment? ?(Note: Be careful not to round any intermediate steps less than six decimal? plac ...

Tapley dental supply company has the following datanet

Tapley Dental Supply Company has the following data: Net Income = $240 Sales = $10,000 Total assets = $6,000 Debt ratio = 75% TIE ratio = 2.0 Current ratio = 1.2 BEP ratio = 13.33% If Tapley could streamline operations, ...

Question - your chief financial officer cfo was unable to

Question - Your chief financial officer (CFO) was unable to attend the recent monthly chamber of commerce meeting. You learned from some other local CFOs that changing exchange rates had dramatically affected their firms ...

Phillips owns 25 of mintor inc a private company in 2007

Phillips owns 25 % of Mintor, Inc. (a private company). In 2007, Mintor had sales of $22,00,000, had net income of $82,000 and Mintor paid $32,000 in dividends. If Phillips uses the Equity Income method, what did Phillip ...

Your sister just deposited 11500 into an investment account

Your sister just deposited $11,500 into an investment account. She believes that she will earn an annual return of 10 percent for the next 7 years. You believe that you will only be able to earn an annual return of 9.2 p ...

Market values and book values lo 1klingon widgets inc

M arket Values and Book Values [LO 1] Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $8 million. The machinery can be sold to the Romulans today for $6.7 million. Klingon's current balance sh ...

A project currently generates sales of 20 million variable

A project currently generates sales of $20 million, variable costs equal 50% of sales, and fixed costs are $4.0 million. The firm's tax rate is 35%. Assume all sales and expenses are cash items. a. What are the effects ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert