Question
6). Consider the following table and information, and assess the NPV of the project. Be sure to show work. The project will last for 4
6). Consider the following table and information, and assess the NPV of the project. Be sure to show work. The project will last for 4 years, and have the following number of sales in the year indicated.
Year | Unit Sales |
1 | 20000 |
2 | 35000 |
3 | 10000 |
4 | 9000 |
The units will sell for 65 dollars each and cost 25 dollars to make. Net working capital will be 20% of next years unit sales. Immediate plant investments will total $250,000. The investment will be depreciated using the 3 year MACRS schedule. After 4 years, the economic and book value of the plant is 0. Assume a tax rate of 35%, and a cost of capital of 18%.
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