Question
You are considering the launch of a new product line in your fertilizer business. You have gathered the following information from staff: Required equipment investment
You are considering the launch of a new product line in your fertilizer business. You have gathered the following information from staff: Required equipment investment $30,000 Projected cash inflow each year, Years 1-8 $20,000 Projected cash outflows each year, Years 1-8 14,000 Salvage value of equipment, end of Year 8 $2,000 In addition, you know the companys cost of capital is 13%, and have determined to judge this product against a required rate of return of 15%. You also judge projects based on impact per share of the firms 1,000 outstanding shares of common stock. Required: (1) Determine the Net Present Value of the project (2) Determine whether the project is acceptable based on NPV (3) Calculate the impact on each share of the firms stock
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