percent. Calculate the NPV of going directly to market and the NPV of test marketing before going to market. (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)
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- Ang Electronics, Incorporated, has developed a new mesh network. If successful, the present value of the payoff (when the product is brought to market) is $34.9 million. If the mesh network fails, the present value of the payoff is $12.9 million. If the product goes directly to market, there is a 50 percent chance of success. Alternatively, the company can delay the launch by one year and spend $1.39 million to test market the mesh network. Test marketing would allow the firm to improve the product and increase the probability of success to 80 percent. The appropriate discount rate is 11 percent. Calculate the NPV of going directly to market and the NPV of test marketing before going to market. (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234, 567.) PLEASE GIVE WHOLE NUMBERS Go to market now first Test marketingAng Electronics, Inc., has developed a new DVDR. If the DVDR is successful, the present value of the payoff (when the product is brought to market) is $24 million. If the DVDR fails, the present value of the payoff is $8.5 million. If the product goes directly to market, there is a 50 percent chance of success. Alternatively, the company can delay the launch by one year and spend $1.2 million to test market the DVDR. Test marketing would allow the firm to improve the product and increase the probability of success to 80 percent. The appropriate discount rate is 11 percent. Calculate the NPV of going directly to market and the NPV of test marketing before going to market. (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) Should the firm conduct test marketing? multiple choice No YesAng Electronics, Inc., has developed a new DVDR. If the DVDR is successful, the present value of the payoff (when the product is brought to market) is $34.8 million. If the DVDR fails, the present value of the payoff is $12.8 million. If the product goes directly to market, there is a 40 percent chance of success. Alternatively, the company can delay the launch by one year and spend $1.38 million to test market the DVDR. Test marketing would allow the firm to improve the product and increase the probability of success to 70 percent. The appropriate discount rate is 12 percent. Calculate the NPV of going directly to market and the NPV of test marketing before going to market.
- Ang Electronics, Inc., has developed a new HD DVD. If the HD DVD is successful, the present value of the payoff at the time the product is brought to market) is $33.6 million if the HD DVD fails, the present value of the payoff is $116 million. If the product goes directly to market, there is a 40 percent chance of success. Alternatively, the company can delay the launch by one year and spend $1.26 million to test market the HD DVD Test marketing would allow the firm to improve the product and increase the probability of success to 70 percent. The appropriate discount rate is 12 percent. Calculate the NPV of going directly to market and the NPV of test-marketing before going to market. (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to nearest whole dollar amount, e.g.. 1,234,567) Go to market now Test marketing first Should the firm conduct test-marketing? O No 20,400,000 YosAng Electronics Inc. has developed a new DVD-R. If the DVD-R is successful, the PV of the payoff (when the product is brought to market) is $37 million. If the DVD-R fails, the PV of the payoff is $24 million. If the product goes directly to market, there is a 34 percent chance of success. Alternatively, Ang can spend $9.0 million immediately and delay the launch by one year to test market the DVD-R. Test marketing would allow the firm to improve the product and increase the probability of success to 80 percent. The appropriate discount rate is 14 percent. a. Calculate the NPV of going directly to market now. (Round the answer to the nearest whole number. Enter the answer in dollars, not millions of dollars. Omit $ sign in your response.) $ NPV b. Calculate the NPV of test marketing first. (Do not round intermediate calculations. Round the answer to 2 decimal places. Enter the answer in dollars, not millions of dollars. Omit $ sign in your response.) $ c. Should the firm conduct test…Ang Electronics, Inc., has developed a new HD DVD. If the HD DVD is successful, the present value of the payoff (at the time the product is brought to market) is $34.3 million. If the HD DVD fails, the present value of the payoff is $12.3 million. If the product goes directly to market, there is a 50 percent chance of success. Alternatively, the company can delay the launch by one year and spend $1.33 million to test-market the HD DVD. Test-marketing would allow the firm to improve the product and increase the probability of success to 80 percent. The appropriate discount rate is 11 percent. Calculate the NPV of going directly to market and the NPV of test-marketing before going to market. (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to nearest whole dollar amount, e.g., 1,234,567.).
- All American Telephones Inc. is considering the production of a new cell phone. The project will require an investment of $13 million. If the phone is well received, the project will produce cash flows of $8 million a year for 3 years, but if the market does not like the product, the cash flows will be only $1 million per year. There is a 50% probability of both good and bad market conditions. All American can delay the project a year while it conducts a test to determine whether demand will be strong or weak. The delay will not affect the dollar amounts involved for the project's investment or its cash flows-only their timing. Because of the anticipated shifts in technology, the 1-year delay means that cash flows will continue only 2 years after the initial investment is made. All American's WACC is 9%. What's the NPV without waiting? What's the NPV of waiting 1 year?All American Telephones Inc. is considering the productionof a new cell phone. The project will require an investment of $13 million. If the phone iswell received, the project will produce cash flows of $8 million a year for 3 years, but ifthe market does not like the product, the cash flows will be only $2 million per year. Thereis a 50% probability of both good and bad market conditions. All American can delay theproject a year while it conducts a test to determine whether demand will be strong or weak.The delay will not affect the dollar amounts involved for the project’s investment or its cashflows—only their timing. Because of the anticipated shifts in technology, the 1-year delaymeans that cash flows will continue only 2 years after the initial investment is made. AllAmerican’s WACC is 8%. What action do you recommend?All American Telephones Inc. is considering the production of a new cell phone. The project will require an investment of $13 million. If the phone is well received, the project will produce cash flows of $8 million a year for 3 years, but if the market does not like the product, the cash flows will be only $1 million per year. There is a 50% probability of both good and bad market conditions. All American can delay the project a year while it conducts a test to determine whether demand will be strong or weak. The delay will not affect the dollar amounts involved for the project’s investment or its cash flows—only their timing. Because of the anticipated shifts in technology, the 1-year delay means that cash flows will continue only 2 years after the initial investment is made. All American’s WACC is 10%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet…
- All American Telephones Inc. is considering the production of a new cellphone. The project will require an investment of $13 million. If the phone is well received, the project will produce cash flows of $8 million a year for 3 years, but if the market does not like the product, the cash flows will only be $2 million per year. There is a 50% probability of both good and bad market conditions. All AMerican can delay the project a year while it conducts a test to determine whether demand will be strong or weak. The delay will not affect the dollar amounts involved project's investment or its cash flows- only their timing. Because of the anticipated shifts in technology, the 1-year delay means that cash flows will continue only 2 years after the initial investment is made. All-American's WACC is 8%. What action do you recommend?All American Telephones Inc. is considering the production of a new cell phone. The project will require an after-tax investment of $13 million. If the phone is well received, the project will produce after-tax cash flows of $9 million a year for 3 years, but if the market does not like the product, the after-tax cash flows will be only $1 million per year. There is a 50% probability of both good and bad market conditions. All American can delay the project a year while it conducts a test to determine whether demand will be strong or weak. The delay will not affect the dollar amounts involved for the project's after-tax investment or its after-tax cash flows-only their timing. Because of the anticipated shifts in technology, the 1-year delay means that after-tax cash flows will continue only 2 years after the initial investment is made. All American's WACC is 13%. What action do you recommend? Enter your answers in millions. For example, an answer of $10,550,000 should be entered as…Spy Peripherals Incorporated (SPI) is considering introducing a new smartphone, to be called SPI Phone 96. The cost of bringing SPI Phone 96 to market is $150 million, but SPI expects the free cash flow from SPI Phone 96 to be $6 million in the first year and to grow at 4% per year thereafter. If SPI’s WACC is 7.5%, should it undertake the project?