Development Cost $ 810,000 Estimated Development Time 9 months Pilot Testing $ 230,000 Ramp-up Cost $ 310,000 Marketing and Support Cost $ 156,000 per year Sales and Production Volume 44,000 per year Unit Production Cost $ 85 Unit Price $ 172 Interest Rate 4 % Assume all cash flows occur at the beginning of each period. Tuff Wheels also has provided the project plan shown below. As can be seen in the project plan, the company thinks that the product life will be three years until a new product must be created.
Picture (a-1) What are the quarterly cash flows and their present value (discounted at 4%) of this project? (Round your answers to the nearest dollar amount. Enter your answers in thousands. Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.)
Project Schedule Kiddy Dozer Period Cash Flow PV Year 1 r = 4% Year 1 Q1 $ $ Q2 $ $ Q3 $ $ Q4 $ $ Year 2 Q1 $ $ Q2 $ $ Q3 $ $ Q4 $ $ Year 3 Q1 $ $ Q2 $ $ Q3 $ $ Q4 $ $ Year 4 Q1 $ $ Q2 $ $ Q3 $ $ Q4 $ $ (a-2) What is the net present value? (Enter your answer in thousands. Round your answer to the nearest dollar amount. Omit the "$" sign in your response.) Net present value $
(b-1) What are the quarterly cash flows and their present value for the Kiddy Dozer if the actual sales is 36,000 per year? (Enter your answers in thousands. Negative amounts should be indicated by a minus sign. Round your answers to the nearest dollar amount. Omit the "$" sign in your response.) Sales Revised to 36,000 per Year Project Schedule Kiddy Dozer Period Cash Flow PV Year 1 r = 4% Year 1 Q1 $ $ Q2 $ $ Q3 $ $ Q4 $ $ Year 2 Q1 $ $ Q2 $ $ Q3 $ $ Q4 $ $ Year 3 Q1 $ $ Q2 $ $ Q3 $ $ Q4 $ $ Year 4 Q1 $ $ Q2 $ $ Q3 $ $ Q4 $ $
(b-2) What is the net present value for the sales revised to 36,000 per year? (Enter your answer in thousands. Round your answer to the nearest dollar amount. Omit the "$" sign in your response.) Net present value $
(b-3) What are the quarterly cash flows and their present value for the Kiddy Dozer if the actual sales is 52,000 per year? (Enter your answers in thousands. Negative amounts should be indicated by a minus sign. Round your answers to the nearest dollar amount. Omit the "$" sign in your response.) Sales Revised to 52,000 per Year Project Schedule Kiddy Dozer Period Cash Flow PV Year 1 r = 4% Year 1 Q1 $ $ Q2 $ $ Q3 $ $ Q4 $ $ Year 2 Q1 $ $ Q2 $ $ Q3 $ $ Q4 $ $ Year 3 Q1 $ $ Q2 $ $ Q3 $ $ Q4 $ $ Year 4 Q1 $ $ Q2 $ $ Q3 $ $ Q4 $ $
(b-4) What is the net present value for the sales revised to 52,000 per year? (Enter your answer in thousands. Round your answer to the nearest dollar amount. Omit the "$" sign in your response.) Net present value $