NPV 70000001071 70000001072 70000001073 20000000 NPV 162978768 NPV 76210341071

Npv 70000001071 70000001072 70000001073 20000000 npv

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NPV = (7,000,000/(1+.07)^1) + (7,000,000/(1+.07)^2) + (7,000,000/(1+.07)^3) – 20,000,000NPV = -1,629,787.68NPV = (7,621,034/(1+.07)^1) + (7,621,034/(1+.07)^2) + (7,621,034/(1+.07)^3) – 20,000,000NPV = 1.80
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Sam Robbins, owner and CEO of PC solutions, arrived at the office and glanced at the front page of the Wall Street of Journal waiting on his deck. One of the articles contained statement from executives of two of the South Korea’s largest semiconductor manufactures – Samsung Electronic Company and Hynix Semiconductor – indicating that they would suspend all their memory chip production for one week. The article wenton to say that another large semiconductor manufacturer was likely to follow suit. Collectively, these three chip manufacturers produce about 30 percent of the world’s basic semiconductor chips.PC Solutions is a small but growing company that assembles PCs and sells them in thehighly competitive market for “clones”. PC solutions experience 100 percent growth lastyear and is in the process of interviewing recent graduates in an attempt to double its workforce.After reading the article, Sam picked up the phone and called a few of his business contacts to verify for himself the information contained in the Journal.Satisfied that the information was correct, he called the director of personnel, Jane Remak.What do you think Sam and Jane discussed? What decision would Sam make?Sam and Jane discussed the decision of increasing their workforce. Currently, the company is interviewing college grads due to their 100% growth last year. However, the decrease in production of semiconductors will increase prices of the chips used to assemble the clones. Therefore, the cost to make the clones the company sells will increase. Due to the rise in cost, the demand for Clones will fall. Since demand for clones will fall, the would be no need to increase the workforce. Therefore, Sam and Jane will make the decision not to hire any new employees for the time being.
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