Question
Your company is preparing to launch a new product over the next 10 years. The equipment to make this new product will have an initial
Your company is preparing to launch a new product over the next 10 years.
The equipment to make this new product will have an initial cost of $154000 to the company. At the end of the project, you believe you can get $26000 for the equipment as salvage. Supplies will cost $1800 the first year and go up by $750 each year. Maintenance costs start at $1510 the first year and will increase by 1.9% each year. The company expects to make $18500 the first year and this will increase by 2.1% each year. Create the Cash flow table showing these costs and profits and the net cash flow. If the interest rate is 3.8%, what will be the NPV of the project?
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