Question
A new line of sneakers is expected to sell 8000 pairs a year at $102 each. The new line is expected to have a 4
A new line of sneakers is expected to sell 8000 pairs a year at $102 each. The new line is expected to have a 4 year life. It requires labor costs of $30.50 and material costs of $24.72 per pair. Fixed costs per year is $74,040. New equipment for production is needed, and requires an investment of $950,000. This equipment will be depreciated straight-line to zero over the life of the project, after which time it will have a market value of $380,000. The project requires an initial investment in net working capital of $43,000. The tax rate is 21 percent and the required return for the project is 15%.
e. Find the NPV (round to the nearest $100, example, 1188>>1200): $
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