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    The document outlines a 4 year project schedule for the Patay2 Chip including development costs, production costs, sales revenue and cash flows. In year 1, the project requires $5 million for development costs. In year 2, an additional $9 million is required for pilot testing, debugging and advance marketing. Production ramps up in years 3 and 4 to 125,000 and 75,000 units respectively with declining unit costs. Sales revenue increases each year from $102.5 million to $48.75 million as production and sales volumes change. The net present value of the project's cash flows is estimated to be $4,030,365.

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    The document outlines a 4 year project schedule for the Patay2 Chip including development costs, production costs, sales revenue and cash flows. In year 1, the project requires $5 million for development costs. In year 2, an additional $9 million is required for pilot testing, debugging and advance marketing. Production ramps up in years 3 and 4 to 125,000 and 75,000 units respectively with declining unit costs. Sales revenue increases each year from $102.5 million to $48.75 million as production and sales volumes change. The net present value of the project's cash flows is estimated to be $4,030,365.

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    13 views1 page

    2

    Uploaded by

    bomzter
    The document outlines a 4 year project schedule for the Patay2 Chip including development costs, production costs, sales revenue and cash flows. In year 1, the project requires $5 million for development costs. In year 2, an additional $9 million is required for pilot testing, debugging and advance marketing. Production ramps up in years 3 and 4 to 125,000 and 75,000 units respectively with declining unit costs. Sales revenue increases each year from $102.5 million to $48.75 million as production and sales volumes change. The net present value of the project's cash flows is estimated to be $4,030,365.

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    © All Rights Reserved
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    Project Schedule Patay2 Chip Year 1 Year 2 Year 3

    Year 4
    1st half 2nd half 1st half 2nd half 1st half 2nd half 1st
    half 2nd half
    Development Cost $(5,000,000) $(5,000,000) $(5,000,000)
    $(5,000,000)
    Pilot Testing $(2,500,000) $(2,500,000)
    Debug $(1,500,000) $(1,500,000)
    Ramp-up Cost $(3,000,000)
    Advance Marketing $(5,000,000)
    Marketing and Support Cost $(500,000) $(500,000)
    $(500,000) $(500,000)
    Production Volume 125000 125000 75000 75000
    Unit Production Cost $(655) $(655) $(545)
    $(545)
    Production Cost $(81,875,000) $(81,875,000)
    $(40,875,000) $(40,875,000)
    Interest rate (10%)
    Sales Volume 125000 125000 75000 75000
    Unit Price $820 $820 $650 $650
    Sales Revenue $102,500,000 $102,500,000
    $48,750,000 $48,750,000

    Period Cash Flow $(5,000,000) $(5,000,000) $(9,000,000)


    $(17,000,000) $20,125,000 $20,125,000 $7,375,000 $7,375,000
    PV Year 1, r = 10% $(5,000,000) $(4,761,905) $(8,163,265)
    $(14,685,239) $16,556,887 $15,768,464 $5,503,339 $5,241,275

    Project NPV $4,030,365

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