Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget
ID: 2765463 • Letter: H
Question
Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three independent projects for Hanmi. Assume the discount rate for Hanmi is 8 percent. Further, Hanmi Group has only $24 million to invest in new projects this year.
Calculate NPV for each investment.
Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three independent projects for Hanmi. Assume the discount rate for Hanmi is 8 percent. Further, Hanmi Group has only $24 million to invest in new projects this year.
Explanation / Answer
Statement showing Cash flows Project CDMA Project G4 Project Wifi Particulars Time PVf@8% Amount PV Amount PV Amount PV Cash Outflows - 1.00 (9,000,000.00) (9,000,000.00) (15,000,000.00) (15,000,000.00) (24,000,000.00) (24,000,000.00) PV of Cash outflows = PVCO (9,000,000.00) (15,000,000.00) (24,000,000.00) Cash inflows 1.00 0.9259 12,000,000.00 11,111,111.11 13,000,000.00 12,037,037.04 22,000,000.00 20,370,370.37 Cash inflows 2.00 0.8573 8,500,000.00 7,287,379.97 28,000,000.00 24,005,486.97 36,000,000.00 30,864,197.53 Cash inflows 3.00 0.7938 6,500,000.00 5,159,909.57 24,000,000.00 19,051,973.78 24,000,000.00 19,051,973.78 PV of Cash Inflows =PVCI 23,558,400.65 55,094,497.79 70,286,541.69 NPV= PVCI - PVCO 14,558,400.65 40,094,497.79 46,286,541.69
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