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Unformatted text preview: sets increases. b. With the fixed price contract:
PV(assets) = PV(revenue) – PV(fixed cost) – PV(variable cost) PV(assets) = $20m
− ( $10m × annuity factor 6%,10years ) −
(0.09) × (1.09) 10 PV(assets) = $101,686,818
Without the fixed price contract:
PV(assets) = PV(revenue) – PV(variable cost) PV(assets) = $20million $10million
0.09 PV(assets) = $111,111,111 Chapter 9 – Finance on the Web
Internet exercise; so answers will vary. The TA will look for evidence of your
understanding of the topics and the skill of us...
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This document was uploaded on 02/02/2014.
- Spring '14