Answer to Question #193527 in Economics of Enterprise for abcd

Question

A proposed chemical plant has the following projected revenues and operating expenses in million of dollars 

Year: 1,2,3,4,5,6,7

Annual revenue, $*10^6: 7, 10, 15, 20, 22, 24, 25

Annual operating expenses, $ (excluding depreciation)*10^6 : 4, 5.6, 6.8, 7.8, 8.8, 9.6, 10

Using fixed-capital investment for the plant is $50 million with working capital of $7.5 million. Using a MARCS depreciation schedule wit a class life of 5 years, determine

a-) The annual cash flow

b-) The net present worth, using the nominal discounted rate of 15 percent

c-) The DCFR

Answer 1

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