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Dickinson Brothers, Inc., is considering investing in a machine to produce computer keyboards. The price of the machine will be $1,450,000, and its economic life
Dickinson Brothers, Inc., is considering investing in a machine to produce computer keyboards. The price of the machine will be $1,450,000, and its economic life is five years. The machine will be fully depreciated by the straight-line method. The machine will produce 28,000 keyboards each year. The price of each keyboard will be $51 in the first year and will increase by 3 percent per year. The production cost per keyboard will be $20 in the first year and will increase by 4 percent per year. The project will have an annual fixed cost of $260,000 and require an immediate investment of $225,000 in net working capital. The corporate tax rate for the company is 25 percent. The appropriate discount rate is 8 percent. What is the NPV of the investment? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV
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