Use this information for questions 13 through 20: Sony announced that it would s

Question

Use this information for questions 13 through 20:
Sony announced that it would spend $400 million on a facility to produce 33 million lithium ion battery cells per month. The plant has an expected life of 8 years with a salvage value of $20 million. If a cell generates $1.25 in revenues against $0.50 in costs, fixed annual costs are $40 million per year, and the MARR is 12% per year, answer the following:

Assume the plant is completed in a year (time zero) and a loan for $300 million was secured to pay for part of the plant (the remaining funds come from the company

Explanation / Answer

after tax cash flow =( revenue-variable cost-Fixed cost)*tax

after tax cash flow =(33000000*1.25 - 33000000*0.5 -40000000)*(1-42%)=-$8845000

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