Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

NPV. Grady Precision Measurement Tools has forecasted the following sales and costs for a new GPS system: annual sales of 48,000 units at $18 a

image text in transcribed
NPV. Grady Precision Measurement Tools has forecasted the following sales and costs for a new GPS system: annual sales of 48,000 units at $18 a unit, production costs at 37% of sales price, annual fixed costs for production $180,000. The company tax rate is 35%. What is the annual operating cash flow of the new GPS system? Shoule Grady Precision Measurement Tools add the GPS system to its set of products? The initial investment is $1,440,00 for manufacturing equipment, which will be depreciated over six years (straight line) and will be sold at the end of fix years for $380,000. The cost of capital is 10%. What is the after-tax cash flow of the GPS system at disposal? (Round to the nearest dollar.) What is the NPV of the new GPS syatem? \$ (Round to the nearest dollar.) Should Grady Precision Measurement Tools add the GPS system to its set of products? (Select the best response) A. No, because the NPV is negative which means the projected annual rate of return on the project is less than the cost of capital

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

Step: 3

blur-text-image

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

Money Banking And Financial Markets

Authors: Lloyd B. Thomas

1st International Edition

0070644365, 9780070644366

More Books

Students also viewed these Finance questions

Question

Determine miller indices of plane A Z a/2 X a/2 a/2 Y

Answered: 1 week ago