Question

A tubing manufacturer sees an upcoming market for special alloy tubing. Its metallurgy and shape characteristics will have to ensure reliability in corrosive environments as well as heretofore unavailable flexing properties. The company is interested in producing the new tubing. What capital expenditure for design and development is justified today if they expect to have incomes of $1,800,000 per year for 5 years beginning at the end of year 4? Interest is 15%.

Answer 1

Annual income = 1,800,000 per year for 5 years Tomy Sttrk. com Чел. 4 pm 5 уши from coy-4 to EDY-8 Interest = 15% what is the capital expenditure justified today? Calculate present worch of the chcanes povo 1800. opo (P1A,15945) (PLF15%,3 Dove 1 800,000 ( 3.352 155) (0-657516 P-V= 3,967, 371.98 or 3,967, 372 The capital expenditure justifred today forte design & developm ment is $3,967, 372.