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 $40. The unit cost of the giftware is $30. Year 1

image text in transcribed
The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $40. The unit cost of the giftware is $30. Year 1 2 3 4 Thereafter Unit Salad 41,000 44,000 18,000 11,000 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 * 41,000 - $40 - $164,000. Plant and equipment necessary to establish the giftware business will require an additional Investment of $219,000. 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 15%. Use the MACRS depreciation schedule. (Do not round Intermediate calculations. Round your answer to the nearest whole dollar amount.) Not present value

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

Finance Plain And Simple

Authors: Sebastian Nokes

1st Edition

0273731297, 978-0273731290

More Books

Students also viewed these Finance questions

Question

Explain why needs motivate our behavior.

Answered: 1 week ago