Question: PUTZ believes that fixed costs for the project will be $ 6 1 5 , 0 0 0 per year, and variable costs are 1

PUTZ believes that fixed costs for the project will be $615,000 per year, and variable costs are 15 percent of sales. The equipment necessary for production will cost $3.3 million and will be depreciated according to a three-year MACRS schedule. At the end of the project, the equipment can be scrapped for $545,000. Net working capital of $255,000 will be required immediately. PUTZ has a tax rate of 23 percent, and the required return on the project is 10 percent. MACRS Schedule What is the NPV of the project?

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