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Unformatted text preview: e assume the company can use tax shields as they arise. 5. Revenues: Sales of 2,000 motors in 2014, 4,000 motors in 2015, and
10,000 motors thereafter. The unit price is assumed to decline from
$4,000 (real) to $2,850 when competition enters in 2016. The latter is the
figure at which new entrants’ investment in the project would have NPV =
0. 6. Operating Costs: We assume direct labor costs decline progressively from
$2,500 per unit in 2014, to $2,250 in 2015 and to $2,000 in real terms in
2016 and after. 7....
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This document was uploaded on 02/02/2014.
- Spring '14