Breakeven cash inflows and risk Blair Gases and Chemicals is asupplier of highly purified gases to s

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Breakeven cash inflows and risk   Blair Gases and Chemicals is asupplier of highly purified gases to semiconductor manufacturers. Alarge chip producer has asked Blair to build a new gas productionfacility close to an existing semiconductor plant. Once the new gasplant is in​ place, Blair will be the exclusive supplier for thatsemiconductor fabrication plant for the subsequent 5 years. Blairis considering one of two plant designs. The first is​ Blair’s”standard” plant which will cost ​$30million to build. The secondis for a​ “custom” plant which will cost ​$ 40million to build. Thecustom plant will allow Blair to produce the highly specializedgases that are required for an emergency semiconductormanufacturing process. Blair estimates that its client will order​10.0 million of product per year if the traditional plant is​constructed, but if the customized design is put in​ place, Blairexpects to sell ​$ 15.0 million worth of product annually to itsclient. Blair has enough money to build either type of​ plant, and,in the absence of risk​ differences, accepts the project with thehighest NPV. The cost of capital is 12.0​%. a.  Find the NPV foreach project. Are the projects​ acceptable? b.  Find the breakevencash inflow for each project. c.  The firm has estimated theprobabilities of achieving various ranges of cash inflows for thetwo​ projects, as shown in the table LOADING… . What is theprobability that each project will achieve the breakeven cashinflow found in part ​(b​)​? d. Which project is more​ risky? Whichproject has the potentially higher​ NPV? Discuss the​ risk-returntrade-offs of the two projects. e. If the firm wished to minimizelosses​ (that is, NPV . . .

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