Coffee Co$.$

Our company is evaluating a project. We have the opportunity to spend $$120,000$ for a new manufacturing machine that will allow us to produc coffeemakers for home use.

The project facts are as follows: depreciation $\frac{120,000}{4\text{y}\text{e}\text{a}\text{r}\text{s}}$

Cost

Life $($years$)$

Price per unit

Variable cost

Quantity $($per year$)$

Annual fixed costs

Tax rate

Required rate of ret$$

$(120,000)$

$4$

$30$

$18$

$10,000$

$40,000$

$34\%$

$12\%$

We want to decide whether to pursue this project. Use the Tax Shiel Version of the OCF formula in your computation and then determin the NPV of this project.