$7.$ Leather Goods Inc. wants to expand its product line into wallets. It is considering producing $50,000$ units per year. The price will be $$15$ per wallet the first year and the price will increase $3\%$ per year. The variable cost is expected to be $$10$ per wallet and will increase by $5\%$ per year. The machine will cost $$400,000,$ and will have an economic life of $5$ years. It will be fully depreciated using the straight line method.The discount rate is $15\%$ and the corporate tax is $34\%.$ What is the NPV of the investment?

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Introduction Leather Goods Inc is considering expanding its product line by producing wallets To assess the feasibility of this investment the company ... View the full answer