Assuming it is now 1st July 2021 , and using a discount rate of 7%,...
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Assuming it is now 1st July 2021 , and using a discount rate of 7%, calculate the Net Present Value of each of projects Ralph and Rufus. Further assume that all costs and revenues stated in appendix 3 arise at the end of the year. Costs and revenues before 1st July 2021 have already been paid / received. Briefly explain which project should be abandoned, should this become necessary. In your answer explain how you have treated the costs and revenues for 2019/20 and 2020/21. Appendix 3: Projected revenue streams from the two leading projects The two projects closest to full commercialisation are code-named Ralph and Rufus, although each has already begun to attract some revenue. The amounts spent on the development, amounts already received, and projected future costs and income streams of each so far and projected future costs are as follows: The costs and revenue streams are expected to last until 30th June 2038 , at which point the patents on each will expire and all competitors will be able to produce their own versions without fear of legal action. From this point on, revenues are likely to be negligible. Owing the current cash flow problem, MSL is considering abandoning one of these projects owing to a lack of resources
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