Stan-Rite Corp of Manitowoc, Wisconsin, is a B to B company that manufactures ma
ID: 3012705 • Letter: S
Question
Stan-Rite Corp of Manitowoc, Wisconsin, is a B to B company that manufactures many types of industrial products, including portable measuring arms with absolute encoders, designed to perform 3D inspections of industrial parts. If the company’s cash flow (in millions) for one of its product divisions is as shown on the table, determine:
( a ) the number of possible i * values
( b ) all rate of return values between 0% and 100%. (draw the cash flow diagram)
Year Expenses Revenues $-20 20 -15 19 -15 35 -20 50 38 30 65Explanation / Answer
Total money going in at the start of first year = 20 ( all numbers are in million $)
Since there are no renveues in the beginning of the year the rate of return for beginning of the year will be =0 % ;
Total money going in during the first year =15
Revenue during first year = 20
Rate of return = (20-15/15)*100 = 33.33%
Total money going in during the second year =25
Revenue during second first year = 19
Rate of return = (19-25/25)*100 = -24%
Total money going in during the third year =15
Revenue during third year = 35
Rate of return = (35-15/15)*100 = 133.33%
Total money going in during the fourth year =20
Revenue during fourth year = 50
Rate of return = (50-20/20)*100 = 150%
Total money going in during the fifth year =25
Revenue during fifth year = 38
Rate of return = (38-25/25)*100 = 52%
Total money going in during the sixth year =30
Revenue during sixth year = 65
Rate of return = (65-30/30)*100 = 116.67%%
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