Answered step by step
Verified Expert Solution
Question
1 Approved Answer
We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows: ear Unit Sales 2 3 4 101,500 113,500 136,500
We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows: ear Unit Sales 2 3 4 101,500 113,500 136,500 142,500 95,500 The new system will be priced to sell at $480 each The cockroach eradicator project will require $1,500,000 in net working capital to start, and total net working capital will rise to 15 percent of the change in sales. The variable cost per unit is $350, and total fixed costs are $2,600,000 per year. The equipment necessary to begin production will cost a total of $23 million. This equipment is mostly industrial machinery and thus qualifies for CCA at a rate of 20 percent. In five years this equipment will actually be worth about 20 percent of its cost. The relevant tax rate is 35 percent, and the required return is 18 percent. Based on these preliminary estimates, 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.) NPV
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started