Copy of ass05_sol

Copy of ass05_sol - 75% Second year probability of demand...

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First Option Year 1 Year 2 D.r. Probabilities Quantity 0.8 0.8 0.64 15000 22500 12000 14400 0.8 0.2 0.16 15000 2400 0.2 0.8 0.16 10000 15000 2000 2400 0.2 0.2 0.04 10000 400 14000 19600 Unit Cost $8,500 $34,000,000 $81,600,000 Annualized $11,523,810 $11,523,810 $11,523,810 Total $45,523,810 $93,123,810 Income/unit $15,000 $60,000,000 $144,000,000 Net $14,476,190 $50,876,190 PV $13,160,173 $42,046,438 Total PV $55,206,612 2nd option Unit cost $10,000 Price 1 0.5 $10,000 $10,400 $40,000,000 $49,920,000 1 0.5 $10,000 $48,000,000 Cost $97,920,000 Net $20,000,000 $46,080,000 PV $18,181,818 $38,082,645 Total PV $56,264,463 Diff ($1,057,851)
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10% $20,000,000
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High volume cutoff 90000 Spot Prices $2 $4 Last year's demand 100000 Current year probability of demand
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Unformatted text preview: 75% Second year probability of demand 75% % change up next year 20% % change up this year 10% Discount rate 20% Multi price $1.20 Mix price $0.90 Current year cost with Multi $129,000 Second year with Multi $89,100.00 $29,700 $27,000 $9,000 $154,800 PV of second year $129,000 Total PV $258,000 Current year with Mix Demand Cost Expected 110000 $161,000 $120,750 100000 $101,000 $25,250 Total curent year $146,000 Next year with Mix 132000 $249,000 $140,063 110000 $121,000 $22,688 120000 $201,000 $37,688 100000 $101,000 $6,313 Total next year $206,750 PV next year $172,292 Total PV $318,292 Difference in favor of Multi $60,292...
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Copy of ass05_sol - 75% Second year probability of demand...

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