A company is evaluating a new product proposal that will last 6 years. The initial outlay...

Transcribed Image Text:

A company is evaluating a new product proposal that will last 6 years. The initial outlay is $2 million. The proposed product selling price is $220 per unit and the variable costs are $55 per unit and sales are planned to be 2,750 units each year. The incremental cash fixed costs for the product will be $3,750 per annum. What is the NPV of this project if the cost of capital is 10% ? (use annuity table) O a. -$40,250 O b. $190,600 O c. $40,250 O d. -$190,600 A company is evaluating a new product proposal that will last 6 years. The initial outlay is $2 million. The proposed product selling price is $220 per unit and the variable costs are $55 per unit and sales are planned to be 2,750 units each year. The incremental cash fixed costs for the product will be $3,750 per annum. What is the NPV of this project if the cost of capital is 10% ? (use annuity table) O a. -$40,250 O b. $190,600 O c. $40,250 O d. -$190,600

Answer rating: 100% (QA)

Correct Option is 40250 Initial Outlay 2000000 Time Period 6 years Cost of Capita... View the full answer