Question
Year 0 Year 1 Year 2 Year 3 Year 4 Revenue 120000 400000 400000 300000 Cost of Goods Sold -60000 -200000 -200000 150000 Gross Profit
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | |
| Revenue | 120000 | 400000 | 400000 | 300000 | |
| Cost of Goods Sold |
| -60000 | -200000 | -200000 | 150000 |
| Gross Profit |
| 60000 | 200000 | 200000 | 150000 |
| Selling, General and Admin |
| -6400 | -6400 | -6400 | -6400 |
| Depreciation |
| -70000 | -70000 | -70000 | -70000 |
| EBIT | -16400 | 123600 | 123600 | 73600 | |
| Income tax (35%) |
| 5740 | -43260 | -43260 | -25760 |
| Incremental Earnings | -22140 | 80340 | 80340 | 47840 | |
|
|
| ||||
| Capital Purchaes | -280,000 |
| |||
| Change to NWC | -5,000 | -5,000 | -5,000 | -5,000 |
A garage is installing a new "bubble-wash" car wash. It will promote the car wash as a fun activity for the family, and it is expected that the novelty of this approach will boost sales in the medium term. If the cost of capital is
10%,
by using the data in the table above, calculate the net present value (NPV) of this project.
A.
$92,193
B.
$87,341
C.
$97,045
D.
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Mergers Acquisitions And Other Restructuring Activities
Authors: Donald DePamphilis
10th Edition
0128150750, 978-0128150757
