Your company was thinking of bidding to sell 10,000 units of powerbanks for 5 years to the SM store, and will not continue to sell anymore after that. The machine needed to be bought to produce this these is $2.5 million and will be depreciated on a straight-line basis to a zero salvage value. This project would also require an initial working capital investment of $30,000 in Accounts Receivables and $20,000 in Inventory, which would be returned at the end of the project. Equipment can be sold for $200,000 at the end of production. Annual fixed costs are at $800,000 while the variable cost per unit is at $100. In addition to the above contract bid, the company can sell 6000, 5000, 4000, 3000 and 2,500 units respectively in each of the years at a price of $250 per unit to other customers. The tax rate is 40% and the required rate of return is 10%. The CEO of your company is willing to undertake this project only if the NPV is higher than $250,000 since there are other projects with NPV's amounting to this value. Should your company go through with this project if the lowest bid price you can go is at $200 per unit?

Is NPV is positive and more than 250,000?

Is NPV is positive but less than 250,000?