Cyberdyne Systems is evaluating a new project for the New Galactic Republic (i.e., creating and sustaining a
Question:
Cyberdyne Systems is evaluating a new project for the New Galactic Republic (i.e., creating and sustaining a droid army). The project will require an immediate investment in PP&E of $3 billion, which will be depreciated on a straight-line basis over 30 years. After the 30 years the PP&E will have no value and will be scrapped. The New Galactic Republic taxes corporate profits at a rate of 50%. The firms assigns this project a discount rate of 18%. Calculate the project NPV and state whether the project should be accepted or rejected.
Annual unit sales70,000
Annual unit sales price $250,000
Annual unit variable cost $220,000
Annual fixed costs $850,000,000
How to calculate the NPV. answers to be without dollar sign or commas, and stated to the nearest whole dollar (e.g., state $123.45 as 123).
The project NPV:
Should the project be accepted or rejected?