A project is expected to sell one million units initially at a price per unit of...

 

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A project is expected to sell one million units initially at a price per unit of $16.50 and a cost per unit of $6.50. Units sold will increase by 10% each year over the project's 3 year life. Inventory each year will be equal to 15% of the next year's forecasted sales, and accounts payable will be equal to 20% of cost of goods sold in the current year. If the cost of capital is 12%, then what is the present value of the changes in net working capital over the life of the project? A project is expected to sell one million units initially at a price per unit of $16.50 and a cost per unit of $6.50. Units sold will increase by 10% each year over the project's 3 year life. Inventory each year will be equal to 15% of the next year's forecasted sales, and accounts payable will be equal to 20% of cost of goods sold in the current year. If the cost of capital is 12%, then what is the present value of the changes in net working capital over the life of the project?

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To calculate the present value of the changes in net working capital over the life of the project we ... View the full answer