Question
What is the NPV of this project? (in 000s) Bogle is considering a two-year project to manufacture microchips. Bogle purchases equipment for $750K. This two-year
What is the NPV of this project? (in 000s)
Bogle is considering a two-year project to manufacture microchips. Bogle purchases equipment for $750K. This two-year project will require additional inventory of $125K and accounts payable of $150K, which reverse at the end of the project. Bogles tax rate is 50%, and its cost of capital is 12%.
Bogle estimates incremental revenue of $600K in years 1 and 2, and operating expenses equal to 15% of revenues. The machine is depreciated straight-line (i.e., 50% in year 1 and 50% in year 2).
What is the NPV of this project? (in 000s)
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