q14

Your company is considering an expansion into a new product area. The company has collected the following information about the proposed product. . The project has an anticipated economic life of 5 years. The company will have to purchase a new machine to produce the product. The machine has an up-front cost (Year 0) of $3,000,000. . The machine will be depreciated on a 3-year MACRS-life basis (depreciation will be taken in Years 1-4 and depreciation rates are: Year 1 = 33%; Year 2 = 45%; Year 3 = 15%; and Year 4 = 7%). The company anticipates that the machine will last for at least five years, and that after five years, the machine will be sold for $400,000 (pre-tax). If the company goes ahead with the project, it will have an effect on the company's net operating working capital. At the outset, Year O, current assets will increase by $450,000, while accounts payable will increase by $200,000 and accruals will increase by $150,000. At Year 5, the net operating working capital will be recovered after the project is completed. . The project is expected to produce revenues of $2,200,000 the first year, $2,500,000 the second and third years, $2,000,000 the fourth year, and $1,600,000 the final year. Operating costs (excluding depreciation) are expected to be equal to 50 percent of sales . CADILI applanulodun is sharing you see Step sharing Hide Your Webcam IL Minimize in Years 1-4 and depreciation rates are Year 4 = 7%). . The company anticipates that the machine will last for at least five years, and that after five years, the machine will be sold for $400,000 (pre-tax) . If the company goes ahead with the project, it will have an effect on the company's net operating working capital. At the outset, Year O, current assets will increase by $450,000, while accounts payable will increase by $200,000 and accruals will increase by $150,000. At Year 5, the net operating working capital will be recovered after the project is completed. The project is expected to produce revenues of $2,200,000 the first year, $2,500,000 the second and third years, $2,000,000 the fourth year, and $1,600,000 the final year. Operating costs (excluding depreciation) are expected to be equal to 50 percent of sales . revenue, . The company's interest expense each year will be $120,000. . Because of synergies, the new project is expected to increase the after-tax cash flows of the company's existing products by $40,000 a year (Years 1-5) and this is considered to be incremental to this particular project. The company's overall WACC is 5 percent. However, the proposed project is more risky than the average project, leading the firm to use a WACC of 10 percent for this project. . The company's tax rate is 40 percent. The project is expected to produce revenues second and third years, $2,000,000 the fourth year, and $1,600,000 the final year. Operating costs (excluding depreciation) are expected to be equal to 50 percent of sales revenue. . The company's interest expense each year will be $120,000. Because of synergies, the new project is expected to increase the after-tax cash flows of the company's existing products by $40,000 a year (Years 1-5) and this is considered to be incremental to this particular project. The company's overall WACC is 5 percent. However , the proposed project is more risky than the average project, leading the firm to use a WACC of 10 percent for this project. The company's tax rate is 40 percent. Determine the NPV for this project . Enter your answer in dollars, rounded to the nearest dollar, with no punctuation. For example, if your answer is "$122,836.01", enter "122836