Question
The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $45. The unit cost of the giftware is $17. Year Unit
The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $45. The unit cost of the giftware is $17.
Year | Unit Sales |
1 | 22,300 |
2 | 31,100 |
3 | 15,700 |
4 | 5,400 |
Thereafter | 0 |
It is expected that net working capital will amount to 27% of sales in the following year. For example, the store will need an initial (year 0) investment in working capital of 0.27 22,300 $45 = $270,945. Plant and equipment necessary to establish the giftware business will require an additional investment of $218,000. 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 19%. What is the net present value of the project? (Round your answer to the nearest whole dollar amount.)
NPV $ |
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