Question
Cyberdyne Systems is evaluating a new project for the New Galactic Republic (i.e., creating and sustaining a droid army). The project will require an immediate
Cyberdyne Systems is evaluating a new project for the New Galactic Republic (i.e., creating and sustaining a droid army). The project will require an immediate investment in PP&E of $3 billion, which will be depreciated on a straight-line basis over 30 years. After the 30 years the PP&E will have no value and will be scrapped. The New Galactic Republic taxes corporate profits at a rate of 50%. The firms assigns this project a discount rate of 18%. Calculate the project NPV and state whether the project should be accepted or rejected.
Annual unit sales70,000
Annual unit sales price $250,000
Annual unit variable cost $220,000
Annual fixed costs $850,000,000
How to calculate the NPV. answers to be without dollar sign or commas, and stated to the nearest whole dollar (e.g., state $123.45 as 123).
The project NPV:
Should the project be accepted or rejected?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started