China Plant

Ratings: 1 Star2 Stars3 Stars4 Stars5 Stars (5.00 out of 5) - Rate Now!
Loading...

Download Category:

China Plant.zip - (155.85 KB)
[
China Plant/China Plant.xlsx
China Plant/Question.txt
China Plant/Screenshot_1.png
]

Your next option is building the plant in China. Assume all output from the facility will be sold into the domestic China market. Calculate the NPV of a DFI (show NPV in Chinese currency units, and converted to USD based on the currency exchange rate per the CIA web site link below).
CIA website: https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html#2076.
Use the following assumptions:
1. The project life is ten years with no salvage value
2. Inflation is expected to be __% annually (research at CIA web site).
3. The plant construction cost incurred in Year 0 is $1,400,000 (convert into local currency at current exchange rate per CIA web site).
4. Estimated sales for sweaters from your plant in Year 1 are projected to be 100,000. Growth is estimated at 12% annually.
5. Sweaters will be priced at equivalent of 6 USD converted to local currency per exchange rate each in Year 1.
6. Wool costs 1.80 USD (convert)/pound in Year 1.
7. Each sweater requires 2 pounds of wool.
8. Labor cost is 0.80 USD (convert)/hr in Year 1.
9. Labor productivity is 2-sweaters/hr.
10. Assume a tax rate of 25%
11. Depreciation is on a straight line basis over 5 years with no salvage value
12. The risk free rate of return is 3%
13. The S&P 500 has been returning 12%
14. Your firm is typically returns about 70% more than the S&P500

Get a fresh solution of this question. Ask it now to our experts.
doubt

Ask Your Question

We have verified professionals who are ready to answer your question.

time

Save Time and Money

We choose experts who can quickly answer your question and that suit your budget.

download

Get Your Answer

Your satisfaction is 100% guaranteed. You can keep on asking questions until you get the answer you need.