Question
What is the net present value of the project if inventories must be increased at the start of the project (year 0) by $350,000 and
What is the net present value of the project if inventories must be increased at the start of the project (year 0) by $350,000 and will be recovered at the end (year 19), given that the NPV of the projectignoring changes in net working capital is $3,113,292.4?
Operating cash flow each year is 659,096.841
Net present value is 3,113,292.410
And here is some more information if you need it
A company will sell Widgets to consumers at a price of $103 per unit. The variable costto produceWidgets is $31 per unit. The company expects to sell 16,000Widgets toconsumers each year. The fixed costs incurred each year will be $180,000. There is an initial investment to produce the goods of $2,400,000 which will be depreciated straight line over the 19 year life of the investmentto a salvage value of $0. The opportunity cost of capital is 10% and the tax rate is 37%.
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