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MBA,MCS,M.phil
Devry University
Jan-2008 - Jan-2011
MBA,MCS,M.Phil
Devry University
Feb-2000 - Jan-2004
Regional Manager
Abercrombie & Fitch.
Mar-2005 - Nov-2010
Regional Manager
Abercrombie & Fitch.
Jan-2005 - Jan-2008
Consider the following information:
......................................................................Year 0......... Year 1....... Year 2....... Year 3..... ..Year 4..... Years 5-10
Investment___________________________ 100
Required rate of return__________________ 17%
Production, millions of pounds per year______ 0_________ 0______ 60________ 120______ 120________120
Spread, $ per pound___________________ 1.40______ 1.40_____ 1.40 _______1.40______ 1.30_______ 1.15
Production Costs________________________ 0________ 0 _______50_________ 50_______ 50_________ 50
Transportation__________________________ 0 ________0_______ 24_________ 10_______ 10_________ 10
Other costs _____________________________0_______ 40_______40_________ 40_______40_________ 40
a-1.) Calculate the NPV of the proposed polyzone project, if spread in year 4 holds at $1.30 per pound.
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b-1.) Calculate the NPV of the proposed polyzone project, if the U.S. chemical company can start up polyzone production at 60 million pounds in year 1 rather than year 2.
c-1.) Calculate the NPV of the proposed polyzone project, if the U.S. company makes a technical advance that reduces its annual production costs to $35.0 million. Competitors' production costs do not change.
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