Question
A new 5-year project has expected sales of 3,400 units, plus or minus 8%; variable costs per unit of $22, plus or minus 2%; annual
A new 5-year project has expected sales of 3,400 units, plus or minus 8%; variable costs per unit of $22, plus or minus 2%; annual fixed costs of $47,000, plus or minus 2%; annual depreciation of $33,000; and a sale price of $45 a unit, plus or minus 3%. The project initially requires $165,000 of fixed assets and $42,000 of net working capital. At the end of the project, the net working capital will be recouped and the fixed assets will produce an aftertax cash inflow of $35,000. The tax rate is 21% and the discount rate is 14%. What is the NPV of the optimistic scenario
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started