XYZ Corp. has a project that sells 14,100 units of product X a year at $3.85 per unit. Its capital equipment costs $8,480 and is depreciated straight- line over 4 years with no salvage value. Its variable costs are 10.80% of sales and fixed costs are $37,900 per year. The required return is 10.70% and the tax rate is 35%. Assume there is no impact on working capital. Ignoring the half-year rule.

What is the NPV of the project?

Answer rating: 100% (QA)

To calculate the NPV of the project we need to find the cash flows for each year and then discount t... View the full answer