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 optimistic-scenario forecast, the annual sales volume is 53,400 units, while the sale price is $138 per unit with a variable cost of $76 per unit. Annual fixed costs are estimated to $1,164,000. If the appropriate discount rate is 12.50% and the tax rate 30%, what is the project's NPV? options: $4,180,821 $4,293,816 $4,406,812 $4,519,807 $4,632,802
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