Question
The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $20. The unit cost of the giftware is $10. Year Unit
The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $20. The unit cost of the giftware is $10.
Year Unit Sales
1 | 25,000 |
2 | 33,000 |
3 | 17,000 |
4 | 8,000 |
Thereafter 0
It is expected that net working capital will amount to 20% of sales in the following year. For example, the store will need an initial (Year 0) investment in working capital of .20 25,000 $20 = $100,000. Plant and equipment necessary to establish the giftware business will require an additional investment of $220,000. This investment will be depreciated using MACRS and a 3-year life. After 4 years, the equipment will have an economic and book value of zero. The firms tax rate is 20%. What is the net present value of the project? The discount rate is 10%. Use the MACRS depreciation schedule. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) IF YOU CAN USE EXCEL THAT WILL BE GREAT. THANKS
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