Based on teh following data, should we undertake an investment in Project X?Our analysis reveals that we can sell 500 units at a price of $10,000 each during each year.The project has a useful life of 4 years. We need to invest $1,100,000.00 in the project equipment at the outset. Annual fixed costs will be $610,000 We propose to follow straight-line depreciation. The equipment will have no salvage value at teh end of the project.We need to invest $900,000 in working capital at teh inception of the project. Thereafter, net working capital will increase to 30% of sales revenue.Variable costs per unit total $5,000.00We use a RRR of 20% in evaluating all such projects

Assume Tax rate of 10%

Answer rating: 100% (QA)

To determine whether it is advisable to undertake an investment in Project X we need to calculate the net present value NPV of the project The NPV wil... View the full answer