The Nu-Tech Company Has a New Project Available to It

question 22

Essay

The Nu-Tech Company has a new project available to it at a cost of $6 million. The project that they can sell 13,000 personal organizers at $172 in net cash flow for each of the next five years. Nu-Tech's discount rate is 15%. What is the NPV of the investment? The executives of Nu-Tech are concerned about the potential of future competition and a subsequent drop in sales and price. If after two year you can dispose of the asset for 1.0 million at what price would it make sense to abandon the project?

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Definitions:

Cocktail Party Effect

The ability of individuals to focus one's auditory attention on a specific source while filtering out a range of other stimuli, as at a noisy gathering.

Cognitive Neuroscience

A branch of neuroscience that studies the biological processes and aspects that underlie cognition, with a focus on the neural connections in the brain involved in mental processes.

Cognition

The endeavor of acquiring knowledge and apprehension through intellectual activities, experiences, and the perception of senses.

States Of Consciousness

Different levels of awareness of one's environment and self, ranging from fully alert and aware to various stages of sleep and altered states.