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Problem 1 0 - 3 5 Cash Flows and NPV ( LO 2 ) We project unit sales for a new household - use laser
Problem Cash Flows and NPV LOWe project unit sales for a new householduse laserguided cockroach search and destroy system as follows: YearUnit Sales The new system will be priced to sell at $ each. The cockroach eradicator project will require $ in net working capital to start, and total net working capital will rise to of the change in sales. The variable cost per unit is $ and total fixed costs are $ per year. The equipment necessary to begin production will cost a total of $ million. This equipment is mostly industrial machinery and thus qualifies for CCA at a rate of In five years, this equipment will actually be worth about of its cost. The relevant tax rate is and the required return is Based on these preliminary estimates, what is the NPV of the project? Enter the answer in dollars. Do not round your intermediate calculations. Round the final answer to decimal places. Omit $ sign in your response. NPV $
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