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Martin Enterprises sells motor homes and campers and currently has an after-tax cost of capital of 7%. Nagle's sells off-road dirt bikes and has
Martin Enterprises sells motor homes and campers and currently has an after-tax cost of capital of 7%. Nagle's sells off-road dirt bikes and has an after-tax cost of capital of 13%. Martin Enterprises is considering adding dirt bikes as part of its sales line up. It estimates that sales from these bikes could become 10% of its overall sales. The initial cash outlay for this project is $50,000. The expected net cash inflows are $8,000 a year for nine years. What is the net present value of this project to Martin Enterprises? a) $2,121.86 b)-$1,007.07 c) -$8,946.76 d) -$12,003.66 e) $2,886.02
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