w3.3 - Net Present Value (NPV) = $38,712,000 From the...

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W3: Solar Powered Car for GM? NPV Analysis Required Initial Investment for the project : Factory Instalation cost : $100,000 $100,000 Total Required Initial Investment for the project $200,000 Required Cost per Unit Material $15,000 Labour $3,000 Running Cost $2,000 Total Required Cost Per Unit $20,000 Year 1 2 3 4 5 Selling Price $40,000 $40,000 $40,000 $40,000 $40,000 No of Unit Sold 1500 1675 1697 1780 1856 Total Net Profit $30,000,000 $67,000,000 $67,880,000 $71,200,000 $74,240,000 0.1 0.1 0.1 0.1 0.1 Present Value $3,000,000 $6,700,000 $6,788,000 $7,120,000 $7,424,000 Now, Net Present Value (NPV) = Total Present Value - Cost of Investment
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Unformatted text preview: Net Present Value (NPV) = $38,712,000 From the result Since the NPV is greater than zero, it would be better to invest in So, GM must have to start the new project of Solar Car. Reference http://en.wikipedia.org/wiki/Net_present_value#Formula http://www.youtube.com/watch?v=aciZNu7kE_g&feature=related Net Present Value :- It is defined as the total present value (PV) of a time series of cash flows. Required Rate of Return is 10% 6 $40,000 1970 $78,800,000 0.1 $7,880,000 $38,912,000 n the project....
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w3.3 - Net Present Value (NPV) = $38,712,000 From the...

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