Question: I need help on the following problem: The initial investment of PP&E is $11 million of a project, over 8 years it will depreciate on
I need help on the following problem:
The initial investment of PP&E is $11 million of a project, over 8 years it will depreciate on a SL basis. PP&E will have no value after the 8 years and it will be thrown out. 30 percent is the tax rate profit, also 12 percent is the discount rate.
| mkt size | 1.5 million |
| yearly mkt share | 12 percent |
| yearly unit price | $50 |
| yearly unit var. cost | $32 |
| yearly fixed cost | $250,000 |
Find net present value and whether or not the project should be accepted
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