Question: Please help me out with the correct ans. Thats all the info i have. Thank you We project unit sales for a new household-use laser-guided

Please help me out with the correct ans. Thats all the info i have. Thank you
We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows: Year Unit Sales 1 2 3 98,500 110,500 133,500 139,500 92,500 4 5 The new system will be priced to sell at $450 each. The cockroach eradicator project will require $1,700,000 in net working capital to start, and total net working capital will rise to 15% of the change in sales. The variable cost per unit is $320, and total fixed costs are $2,000,000 per year. The equipment necessary to begin production will cost a total of $20 million. This equipment is mostly industrial machinery and thus qualifies for CCA at a rate of 20%. In five years, this equipment will actually be worth about 20% of its cost. The relevant tax rate is 35%, and the required return is 18%. Based on these preliminary estimates, what is the NPV of the project? (Enter the answer in dollars. Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $ 9746925.07 We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows: Year Unit Sales 1 2 3 98,500 110,500 133,500 139,500 92,500 4 5 The new system will be priced to sell at $450 each. The cockroach eradicator project will require $1,700,000 in net working capital to start, and total net working capital will rise to 15% of the change in sales. The variable cost per unit is $320, and total fixed costs are $2,000,000 per year. The equipment necessary to begin production will cost a total of $20 million. This equipment is mostly industrial machinery and thus qualifies for CCA at a rate of 20%. In five years, this equipment will actually be worth about 20% of its cost. The relevant tax rate is 35%, and the required return is 18%. Based on these preliminary estimates, what is the NPV of the project? (Enter the answer in dollars. Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $ 9746925.07
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
