Your company is evaluating a new product and you are required to provide a financial evaluation and recommendation Marketing has given the following estimates: Operations has given the following estimates: \begin{tabular}{l|l} VMC & $60 per unit each year \\ \hline Fixed Mfg Costs & $25,000 each year \end{tabular} Working capital required for this project: $20,000 is required up front; subsequent years is estimated to be 15% of $ sales Cost of Machinery $800000 Machine depreciated using 7-years MACRS table (provided on next tab) Anticipate salvage value: 20% of original cost of machine Prior to start-up and caused by the installation of the new machine, production will be disrupted causing the loss of 500 units selling for $50 with a VMC of $30 Info from the CFO: \begin{tabular}{l|l} \hline Marginal tax rate: & 21% \\ \hline Required rate of return: & 15% \\ \hline \end{tabular} Assume 0 inflation She has asked you to calculate the following and asked for your recommendation, accept or reject the project NPV IRR Payback CAPEX Example Your company is evaluating a new product and you are required to provide a financial evaluation and recommendation Marketing has given the following estimates: Operations has given the following estimates: \begin{tabular}{l|l} VMC & $60 per unit each year \\ \hline Fixed Mfg Costs & $25,000 each year \end{tabular} Working capital required for this project: $20,000 is required up front; subsequent years is estimated to be 15% of $ sales Cost of Machinery $800000 Machine depreciated using 7-years MACRS table (provided on next tab) Anticipate salvage value: 20% of original cost of machine Prior to start-up and caused by the installation of the new machine, production will be disrupted causing the loss of 500 units selling for $50 with a VMC of $30 Info from the CFO: \begin{tabular}{l|l} \hline Marginal tax rate: & 21% \\ \hline Required rate of return: & 15% \\ \hline \end{tabular} Assume 0 inflation She has asked you to calculate the following and asked for your recommendation, accept or reject the project NPV IRR Payback CAPEX Example