Question
MadeTaylor Inc. manufactures financial calculators. The company is deciding whether to introduce a new calculator. this calculator will sell for $150. The company feels that
MadeTaylor Inc. manufactures financial calculators. The company is deciding whether to introduce a new calculator. this calculator will sell for $150. The company feels that the sales will be 10,000, 10,000, 10,000, 14,000, 14,000, and 14,000 units per year for the next 6 years. variable cost will be 15% of sales, and fixed cost are a $1,000,000.00 per year. The firm hired a marketing team to analyze the viability of the product and the marketing analysis cost $2,500,000.00. The company plans to use a vacant warehouse to manufacture and store the calculators. based on the recent appraisal. the warehouse and the property is worth 10 million on an after tax basis. if the company does not sell the property today then it will sell the property 6 years from today at the currently appraised value. this project will required an injection of networking capital at the onset of the project in the amount of $2 million dollars. this networking capital will be fully recovered at the end of the project. The firm will need to purchase some equipment in the amount of $3,800,000.00 to produce the new calculator. depreciate the equipment using a 7-year MACRS. The firm is able to sell the machine at the end of the project for a million dollars. The firm requires a 9% return on its investment and has a tax rate of 21%. calculate The net present value of the project
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