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Gojo Industries is looking to invest in a machine to make new hand sanitizer bottles. The machine costs $1 million and it will last for
Gojo Industries is looking to invest in a machine to make new hand sanitizer bottles. The machine costs $1 million and it will last for 2 years. It will make an average of 10,000 units per year that will be sold at $111 net cash flow per unit. Gojo predicts that there is a 50% chance it will discover that the new bottles are a successful product in a year. If they are a success, Gojo will expand production to 20,000 units for sale in year 2. If it is not a success, Gojo will shut down the line and sell the machine for after tax salvage value of $510335 at the end of Year 1. The discount rate is 11%. What is the NPV of this project? Select one: a. $900901 b. $1475168 c. $1108001 d. $657550 e. $1130782
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