Question
The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $37. The unit cost of the giftware is $21. Year Unit
The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $37. The unit cost of the giftware is $21.
Year | Unit Sales |
1 | 19,900 |
2 | 31,600 |
3 | 12,400 |
4 | 4,600 |
Thereafter | 0 |
It is expected that net working capital will amount to 30% of sales in the following year. For example, the store will need an initial (year 0) investment in working capital of 0.3 19,900 $37 = $220,890. Plant and equipment necessary to establish the giftware business will require an additional investment of $199,000. 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 15%. What is the net present value of the project? (Round your answer to the nearest whole dollar amount.)
NPV $ |
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