Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $44. The unit cost of the giftware is $19. Year 1

image text in transcribed

The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $44. The unit cost of the giftware is $19. Year 1 2 3 4 Thereafter Unit Sales 21, 900 26, 400 12, 500 3, 700 0 It is expected that net working capital will amount to 25% of sales in the following year. For example, the store will need an initial (year 0) investment in working capital of 0.25 x 21,900 $44 = $240,900. Plant and equipment necessary to establish the giftware business will require an additional investment of $205,000. This investment will be depreciated in an asset class with a CCA rate of 25%. We will assume that the firm has other assets in this asset class. After 4 years, the equipment will have an economic and book value of zero. The firm's tax rate is 35%. The discount rate is 17%. What is the net present value of the project? (Round your answer to the nearest whole dollar amount.) NPV $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

House Hunting Real Estate

Authors: Bain

1st Edition

B0CF4FRLJF

More Books

Students also viewed these Finance questions