ourse.content.assessment.attempt.menu

Test

Class test $19$ August CH$10$ FMG$260$

Class test $19$ August CH$10$ FMG$260$

$112$ minutes remaining

$25$ OF $25$ QUESTIONS REMAINING

Test Content

Question $1$

$2$

Points

The Bruin's Den Outdoor Gear is considering a new $7-$year project to produce a new tent line. The equipment necessary would cost $$1\mathrm{.}71$ million and be depreciated using straight$-$line depreciation to a book value of zero. At the end of the project, the equipment can be sold for $15$ percent of its initial cost. The company believes that it can sell $27,500$ tents per year at a price of $$72$ and variable costs of $$32$ per tent. The fixed costs will be $$475,000$ per year. The project will require an initial investment in net working capital of $$225,000$ that will be recovered at the end of the project. The required rate of return is $11\mathrm{.}5$ percent and the tax rate is $21$ percent. What is the NPV$?$

$$697,433$

$$817,152$

$$792,011$

$$911,994$

$$1,017,011$