We assume the company can use tax shields as they

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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.

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