Question
Consider the following project for Dawg Incorporated: YEAR 0 1 2 3 4 5 Sales $150,000 $150,000 $150,000 $150,000 $150,000 Cost of Goods $65,000 $65,000
Consider the following project for Dawg Incorporated:
| YEAR | 0 | 1 | 2 | 3 | 4 | 5 |
| Sales |
| $150,000 | $150,000 | $150,000 | $150,000 | $150,000 |
| Cost of Goods |
| $65,000 | $65,000 | $65,000 | $65,000 | $65,000 |
| S&A |
| $30,000 | $30,000 | $30,000 | $30,000 | $30,000 |
| Depreciation |
| $30,000 | $30,000 | $30,000 | $30,000 | $30,000 |
| Investment in NWC | $1,000 | $500 | $500 | $500 | $500 | $500 |
| Investment in Gross PPE | $150,000 |
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The project will last 5 years and has the same risk as the typical Dawg Incorporated project. The firm has a capital structure of 30.00% debt and 70.00% equity. The cost of debt is 8.00%, while the cost of equity is estimated at 15.00%. The tax rate facing the firm is 30.00%. There is no reclaimed NWC or NSV at end of year 5.
What is the NPV for this project?
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Personal Finance
Authors: E. Thomas Garman, Raymond E. Forgue, Jonathan Fox
14th Edition
0357901495, 9780357901496
