Question
A company is considering a new project requiring an upfront fixed-asset investment of $1,000,000 with an economic life of five years. Depreciation is taken on
A company is considering a new project requiring an upfront fixed-asset investment of $1,000,000 with an economic life of five years. Depreciation is taken on a straight-line basis, with no expected salvage value. Net working capital required immediately is expected to be $100,000 and will be recovered in full upon the project's completion in five years. In the pessimistic-scenario forecast, the annual sales volume is 27,900 units, while the sale price is $87 per unit with a variable cost of $49 per unit. Annual fixed costs are estimated to $810,000. If the appropriate discount rate is 10.25% and the tax rate 30%, what is the project's NPV? -$141,439 -$145,262 -$149,084 -$152,907 -$156,730
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