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Chapter 7 Problems: 1A firm is considering a new project. The proiect is expected to generate sales of 15,000 units per year. Units will sell
Chapter 7 Problems: 1A firm is considering a new project. The proiect is expected to generate sales of 15,000 units per year. Units will sell at $14 each. Variable costs are expected to be $8 each for det var s7 each thereafter. Fixed costs will be $5,000 per year. The machine to make the products will cost $100,000 to install and will be depreciated over a MACRS 3 vear life. The project is expected to exist for eactly four years. Working capital requirements will be $10,000. At the end of the prolect the machine will be sold for $20,000. The tax rate is 38 percent. What is the NPV of this project if the interest rate is 10 percent? require. The project is excost $100,000 to is will be 55.000 expected to be sees of 15.000 Anna
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