The manufacture of herbat health tonic is a competitive industry. The manufacturing facilities have an...
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The manufacture of herbat health tonic is a competitive industry. The manufacturing facilities have an annual output of 100,000 gallons, Operating costs are $2 per gallon. A 100,000-gallon capacity plant costs $500,000 to build and has an indefinite life, with no salvage value. The cost of capital is 20 percent (assume no toxes). Your company has discovered a new process that lowers the operating cost per gallon to $100. Assuming that the competition will catch up in five years and the market demand is sufficiently high, what is the net present value of bullding a new plant with new technology? Multiple Chaice +5500,000 +52+6.64 +5299.061 $220,000
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