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The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $50. The unit cost of the giftware is $40. Year 1
The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $50. The unit cost of the giftware is $40. Year 1 2 3 4 Thereafter Unit Sales 35,000 38,000 12,000 6,000 0 It is expected that net working capital will amount to 10% of sales in the following year. For example, the store will need an initial (Year O) investment in working capital of 10 * 35,000 - $50 = $175,000. Plant and equipment necessary to establish the giftware business will require an additional investment of $213,000. 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 firm's tax rate is 21%. 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.) Net present value
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