Question
What is the NPV of the tablet project, which is a 3-year project being evaluated by Sub Woophers, that involves Sub Woophers launching a line
What is the NPV of the tablet project, which is a 3-year project being evaluated by Sub Woophers, that involves Sub Woophers launching a line of speakers for tablets?The project would involve an initial investment in equipment of $190000 today. Cash flows from capital spending would be $0 in year 1, $0 in year 2, and $44000 in year 3 Operating cash flows are expected to be $-80000 in year 1, $100000 in year 2, and $170000 in year 3. The cash flow effects from the change in net working capital are expected to be $-15000 today; $6000 in 1 year; $-120000 in 2 years; and $10000 in 3 years.The tax rate is 50 percent. The cost of capital is 6.22 percent. The firm would borrow at an interest rate of 6.91 percent by receiving $190000 today & paying back $240000 in 3 years ($40,000 of interest & $190000, of principal)(answer must be rounded to a whole number)
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