All Calculation and computation should be in Excel spreadsheet, show clearly all formulas The BlueWheel Inc., a company that produces alternative energy vehicles is considering an expansion of their product line to Taiwan. The expansion would require
To calculate the cost of the expansion, BlueWheel will need to consider:
1. Start-up costs (one-time fixed cost): S
2. Yearly operating expenses (variable costs): V
3. Revenues per unit sold: R
4. Number of expected units sold per year: U
5. Cost of capital (discount rate): r
The calculation for the net present value (NPV) can be represented by the following formula:
NPV = -S + (R x U) / [1 + r]^(n/n+m) – V x [1 + r]^(-m)
Where n is the number of years before start up and m is the number of years after start up that you are calculating for.