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please help, my answer is 0.9267 is it right? Better Mousetraps has developed a new trap. It can go into production for an initlal investment
please help, my answer is 0.9267 is it right?
Better Mousetraps has developed a new trap. It can go into production for an initlal investment in equipment of $6 million. The equipment will be depreclated stralght-line over 5 years to a value of zero, but in fact it can be sold after 5 years for $500,000. The firm belleves that working capital at each date must be maintained at a level of 10% of next year's forecast sales. The firm estlmates production costs equal to $1.50 per trap and belleves that the traps can be sold for $4 each. Sales forecasts are given in the following table. The project will come to an end in 5 years, when the trap becomes technologically obsolete. The firm's tax bracket is 35%, and the required rate of return on the project is 12% What is project NPV? (Round your answer to 4 decimal places. Enter your answer in millions of dollars. Use the minus slgn for negative value.)Step by Step Solution
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