You were hired as a financial consultant to Defense Electronics, Inc (DEI), a la

Question

You were hired as a financial consultant to Defense Electronics, Inc (DEI), a large, publicly traded firm that is the market share leader in radar detection systems (RDSs). The company is looking at setting up a manufacturing plant overseas to produce a new line of RDSs. This will be a five-year project. The company bought some land three years ago for $7 million in anticipation of using it as a toxic dump site for waste chemicals, but it built a piping system to safely discard the chemicals instead. If the company sold the land today it would receive $6.5 million after taxes. In five years the land can be sold for $4.5 million after taxes and reclamation costs. The company wants to build the new anufacturing plant on this land; the plant will cost $15 million to build. The following market data on DEI

Explanation / Answer

a)55000 b)15.6 c)67890 d)890000 e)better using the net NPV

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