KING 01 Help Save & Exit Submit You have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ), manufacturers of fine zithers. The market for zithers s growing quickly. The company bought some land three years ago for $1.32 milion in anticipation of using it as a toxic waste dump site but has recently hired another company to handle all toxic maternials. Based on a recent appraisal, the company believes it could sell the land for S1.420,000 on an afterta basis. At the end of the project, the land cold bo old for St 520 000 on an ane tass 20 also hired a marketing firm to analyze the zither market, at a cost of $117,000. An excerpt of the marketing report is as The zither industry will have a rapid expansion in the next four years With the brand name recognition that PUTZ brings to bear, we feel that the company wll be able to sell 3,000,3,900, 4,500, and 3,400 units each year for the next four years, respectively. Again, capitalizing on the name recognition of PUTZ, we feel that premium price of $570 can be charged for each zither. Since zithers appear to be a fad, we feel at the end of the four-year period, sales should be discontinuerd PUTZ feels that fixed costs for the project will be $385,000 per year, and variable costs are 15 percent of sales. The equipment necessary for production project, the equipment can be scrapped for $360,000. Net working capital of $117,000 will be required recaptured at the end of the project. PUTZ has a 40 percent tax rate and the required return on the project is 13 percent. Refer to will cost $2.7 million and will be depreciated according to a three-year MACRS schedule At the end of the ly and will be Prev 1 of 5EE Next> 031 PM Type hereto company also hired a marketing firm to analyze the zither market, at a cost of $117,000. An excerpt of the marketing report is as follows The zither industry will have a rapd expansion in the next four years. With the brand name recognition that PUTZ brings to bear, we feel that the company will be able to sell 3,000, 3,900, 4,500, and 3,400 units each year for the next four years, respectively. Again, capitalizing on the name recognition of PUTZ, we feel that a premium price of $570 can be charged for each zither. Since zithers appear to be a fad, we feel at the end of the four-year period, sales should be discontinued 20 PUTZ fels that fixed costs for the project will be $385000 per year, and variable costs are 15 percent of sales. The equipment necessary for production will cost $2.7 million and will be depreciated according to a three-year project, the equipment can be scrapped for $360,000. Net working capital of $117,000 will be required immediately and will be schedule. At the end of the at the end of the project PUTZ has a 40 percent tax rate and the required return on the project is 13 percent Refer to Prit Table 83 What is the NPV of the project? (Do not round intermediate celculations and round your answer to 2 decimal places, e.g, 32.16.) Prev 1of5 Next> O Type here to search