Question
Projected sales for a new PODS container follows: Year Unit sales 1 $1,750,000 2 2,100,000 3 2,450,000 The project will require $250,000 in net working
- Projected sales for a new PODS container follows:
| Year | Unit sales |
| 1 | $1,750,000 |
| 2 | 2,100,000 |
| 3 | 2,450,000 |
The project will require $250,000 in net working capital to start. Variable costs are 65% of sales, and total fixed costs are $275,000 per year. The cost of equipment is $1,000,000. The equipment qualifies for a CCA rate of 20 percent. The salvage value at the end of 3 years is $450,000.
The relevant tax rate is 30 percent, and the required return is 15 percent. What is the NPV of the project?
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The AMA Handbook Of Financial Risk Management
Authors: John J. Hampton
1st Edition
0814417442, 978-0814417447
