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Still confused. help please. Thank you! Please Submit the answer in an MS-Excel file format. Show your work in calculating the project's expected value (NPV)
Still confused. help please.
Thank you!
Please Submit the answer in an MS-Excel file format. Show your work in calculating the project's expected value (NPV) with calculations and formulas. Modern Fabrics, Inc. is contemplating the formation of a project team to develop a new sock printing service. The service would allow customers to order customized socks over the Internet based on their own photographs. Modern Fabrics will initially need to invest $500,000 to purchase equipment to produce these special socks. The company estimates they can sell the socks for $17.50 per pair, and they plan to keep this selling price steady over a period of 6 years. The company expects they will be able to sell 30,000 pairs of socks in the first year, and then experience a 10% growth rate in sales annually over the next 5 years (6 years total in the calculation). The variable expense to produce each pair of socks will start at $3 per pair, with an expected inflation rate for variable expenses of 3% per year over the same 6-year period. The company uses an 11% discount rate to calculate NPV. The leaders of Modern Fabrics have asked their project manager to calculate a NPV to determine the financial value of pursuing this product development project for the company. What is the Net Present Value (NPV) for Style-On over the life of this 6-year period? Submit your financial/NPV analysis in an Excel spreadsheet with all your calculations and formulas visibleStep by Step Solution
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