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6. (2 pts)You are considering embarking on a new project to create the world's finest chocolates. The equipment would cost $50,000 today and depreciate fully
6. (2 pts)You are considering embarking on a new project to create the world's finest chocolates. The equipment would cost $50,000 today and depreciate fully and evenly over the next four years. You also need to spend $21,000 on inventory today and generate $15,000 of accounts payable today. You expect to use $2,000 of inventory each year and sell all remaining inventory at year 4 . Accounts payable will stay constant until year 4 when you will pay all owed expenses. The cost to operate the equipment and building is $45,000 in year 1 , increasing by $5,000 each subsequent year. You expect sales of $60,000 in year 1,$65,000 in year 2,$75,000 in year 3 , and $90,000 in year 4 . You expect to sell your equipment for $3,000 in year 4 . If you have a tax rate of 35% and a required return of 14%, what is the project's NPV
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