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Use the accurate data in the question below. Solve in detail (step by step ) to find the NPV so that the concepts can be understood clearly.

Note: Use the CCA rate (i.e., 20% for class 8

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Appendix 8A

The only information you need from the below table is the CCA rate (i.e., 20% for class 8). You can then compute CCA

Goodweek Tires Inc. After extensive research and development, Goodweek Tires Inc. has recently developed a new tire, the SuperTread, and must decide whether to make the investment necessary to produce and market it. The tire would be ideal for drivers doing a large amount of wet weather and off-road driving in addition to normal highway usage. The research and development costs so far have totalled about $10 million. The SuperTread would be put on the market beginning this year, and Goodweek expects it to stay on the market for a total of four years. Test marketing costing $5 million has shown that there is a significant market for a SuperTread-type tire. As a financial analyst at Goodweek Tires, you have been asked by your CFO, Alana Smith, to evaluate the SuperTread project and recommend whether to go ahead with the investment. Except for the initial investment, which will occur immediately, assume all cash flows will occur at year-end. markets: expected to sell for $41 per tire. The variable cost to produce each tire is $29. Variable costs are the same as in the OEM market. general administration costs the first year. This cost is expected to increase at the inflation rate in the subsequent years. category). Goodweek Tires expects the SuperTread to capture 11 percent of the OEM market. working capital requirements will be 15 percent of sales. What is the NPV of this project? TABLE 8A.1 Common Capital Cost Allowance Classes Description 14% Most buildings you bought after 1987 and the cost of certain additions or alterations made after 1987. 35 Most buildings acquired before 1988 (or 1990 , under certain conditions). Also include the cost of additions or alterations made after 1987. 610 Frame, log, stucco on frame, galvanized iron, or corrugated metal buildings that meet certain conditions. Class 6 also includes certain fences and greenhouses. vehicles and some passenger vehicles. 10.130 A passenger vehicle not included in class 10. 13 Varies Leaschold interest - You can claim CCA on a leaschold interest, but the maximum rate depends on the type of leasehold interest and the terms of the lease. 17 Roads, parking lots, sidewalks, airplane runways, storage areas, or similar surface construction