Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

We project unit sales for a new househald - use laser - guided cackroach search and destroy system as follows: table [ [ Year

We project unit sales for a new househald-use laser-guided cackroach search and destroy system as follows:
\table[[Year,Undt 5ales],[1,93,500],[2,110,500],[3,133,500],[4,139,500],[5,92,500]]
The new system will be priced to sell at $450 each.
The cockroach eradicator project will require $1700,000 in net working capital to start and tocal net working captal will rise to 15% of the change in soles. The variable cost per unt is $320. and total fixed costs are $2,000,000 per year. The equipmomt necessary to begin production will cost a total of $20 mition. This equipment is mostly industrial machinery and thus qualifies for CCA at a rate of 20%. In five years, this equipment will actually be worth about 20% of its cost.
The relevam tax rate is 35%, and the required retum is 18% Based on these preiminary estmales, what is the NPV of the project? (Enter the answer in dollars. Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)
NPY
5
image text in transcribed

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_2

Step: 3

blur-text-image_3

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

Financial Accounting Reporting And Analysis

Authors: Earl K. Stice, James D. Stice

7th Edition

0324227329, 978-0324227321

More Books

Students also viewed these Accounting questions

Question

Distinguish between direct and indirect labour costs.

Answered: 1 week ago

Question

5. What are the other economic side effects of accidents?

Answered: 1 week ago