Question
Adidas Inc. is looking at a new system with an installed cost of $397,800. This cost will be depreciated straight-line to zero over the project's
Adidas Inc. is looking at a new system with an installed cost of $397,800. This cost will be depreciated straight-line to zero over the project's 7-year life. The new system will increase sales by $122,400 per year, pre-tax. In addition to the installed costs, the system requires an initial investment in net working capital of $28,560. All of the net working capital will be recovered at the end of the project. At the end of the project, the new system is sold for $61,200. The tax rate is 33 percent and the discount rate is 9 percent. What is the projects net present value (NPV)? (You dont have to use the table if you dont wish to).
A. -$41,311 B. -$7,820 C. $81,507 D. $98,441 E. $118,821
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