X Company has an opportunity to accept a special order that will result in profi
ID: 2504499 • Letter: X
Question
X Company has an opportunity to accept a special order that will result in profit of $57,000. If X Company accepts the order, the marketing manager says that there will be an adverse reaction by regular customers for several years. In particular, profits will fall by an estimated $10,000 in each of the next 4 years. Assuming a discount rate of 7%, what is the net present value of accepting the special order? X Company has an opportunity to accept a special order that will result in profit of $57,000. If X Company accepts the order, the marketing manager says that there will be an adverse reaction by regular customers for several years. In particular, profits will fall by an estimated $10,000 in each of the next 4 years. Assuming a discount rate of 7%, what is the net present value of accepting the special order? X Company has an opportunity to accept a special order that will result in profit of $57,000. If X Company accepts the order, the marketing manager says that there will be an adverse reaction by regular customers for several years. In particular, profits will fall by an estimated $10,000 in each of the next 4 years. Assuming a discount rate of 7%, what is the net present value of accepting the special order?Explanation / Answer
NPV = 57,000 - 10,000/1.07 -10,000/1.07^2 - 10,000/1.07^3 - 10,000/1.07^4
NPV = 57,000 - 10,000*3.387 = $ 23,127.89
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.