QUESTION tea manufacturer conducted a marketing study two years ago to determine the consumers preferences for diferent types of organic teas Thes shudy s extensive and detrimental in their decision to start a new organic tea division today It cost them $800,000 to perform this study The company is considering introducing new flavors of organic teas. The company weill ad a new assembly line in order to produce the organic tea packages soperat from their existing assembly line for regular non-organic teas The project has an anticipated life of 4 years. The new assembly line has a cost of $1,700,000. It will require $500,000 to customize it to the new specifications for organic tea production and $200 000 fr transportation and shipping to the company's plant. The new machine falls into 5-years MACRS The organic tea production will require inventories to increase by $1,200,000 at time 0, in addition, accounts payables and accrua's wll category (20%, 32%, 192%, 11 52%, 11 52% and 5 76%). increase by $550.000 and $150,000 respectively The organic tea is expected to generate sales revenue of $1,000,000 the frst year The revenue is expected to increase by $400,000 awiry year Each year the operating costs (excluding depreciation) are expected to equal 45 percent of sales revenue In order to do this expansion, the company will borrow $4 million. The annual interest expense on this borrowing $400,000 The organic tea is expected to decrease the company's existing non-organic tea sale by $450,000 per year before tax bosis The company can sell the new machine at the end of 4 years for $70.000 in the market. The company's cost of capital is 12 percent The company s tax ate is 40 percent What is the NPV of the project? -1,236,520 67 -1,105.273.60 1.958,364 45 -859.367 14 985 264 66 Cliel Save and Submit to save and submit. Click Save All Ansvers to save all answers