Question: CGX Transmitters is developing a 2 nd generation optical transmitter. The project will last for three years, at that time work will begin on 3rd
CGX Transmitters is developing a 2 nd generation optical transmitter. The project will last for three years, at that time work will begin on 3rd generation optical transmitters. CGX always uses straight line depreciation. The equipment will cost $13.8M and at the end of three years, the salvage value of the equipment will be $1.8M. Sales are expected to be $24M in year 1 and grow at 25% into each future year. Cost of Goods Sold will be 60% of sales. Fixed costs are $5M/ year. Net working capital requirements are $2.2M,2.65M, and 1.9M in years 13 respectively. The company's tax rate is 25%. The discount rate is 15%. Fill in any missing information you need to complete the capital budget. ( 20pts) (values denoted in millions) : Should the company take on this project based on NPV? (5 pts)
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