Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Dickinson Brothers, Inc., is considering investing in a machine to produce computer keyboards. The price of the machine will be $986,000, and its economic life

Dickinson Brothers, Inc., is considering investing in a machine to produce computer keyboards. The price of the machine will be $986,000, and its economic life is five years. The machine will be fully depreciated by the straight-line method. The machine will produce 31,000 keyboards each year. The price of each keyboard will be $30 in the first year and will increase by 4 percent per year. The production cost per keyboard will be $10 in the first year and will increase by 5 percent per year. The project will have an annual fixed cost of $206,000 and require an immediate investment of $36,000 in net working capital. The corporate tax rate for the company is 35 percent. The appropriate discount rate is 12 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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Production And Operations Analytics

Authors: Steven Nahmias, Tava Lennon Olsen

8th Edition

1478639261, 9781478639268

More Books

Students also viewed these Finance questions

Question

Discuss the steps used in strategic planning.

Answered: 1 week ago

Question

EX: un is Fa AcV=43,5g/mol EX: un is Fa AcV=43,5g/mol

Answered: 1 week ago

Question

1. Let a, b R, a Answered: 1 week ago

Answered: 1 week ago

Question

Discuss the history of human resource management (HRM).

Answered: 1 week ago