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A new project involves the purchase of a 9000 food processing machine. The machine would be depreciated on a straight line basis over its 3
A new project involves the purchase of a 9000 food processing machine. The machine would be depreciated on a straight line basis over its 3 year useful life to a book value of $811. At the end of the life of the project (at the three year point) the machine will be sold for an estimated $851. The project will cause an increase in sales of $5160 in each of years 1-3. It is also expected to enhance efficiency and reduce operating expenses by $1583 in each of years 1-3. The project will require an increase in accounts receivable of $1050 and an increase in accounts payable of $702 upfront. The projects impact on these accounts is expected to disappear at project end (in year 3). The firms marginal tax rate is 40% and its WACC is 12%. The NPV of this project is $___
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