Windsor Co. believes it can see sell 10,000 home security devices per year at $35 a piece.
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Windsor Co. believes it can see sell 10,000 home security devices per year at $35 a piece. They cost $20 each to manufacture. Fixed production costs will run $30,000 per year. The necessary equipment costs $150,000 to buy and will be depreciated at a 20% CCA rate. The equipment will have zero salvage value after the five-year lift of the project. When this project is over, there will still be other assets in the CCA class. The Company needs to invest $40,000 in net working capital up front, but no additional net working capital investment will be necessary. The discount rate is 16%, and the tax rate is 43.5%. What do you think of the proposal?
Related Book For
Financial Accounting Tools for business decision making
ISBN: 978-0470534779
6th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
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