Use the In-class exercise for this problem. Several employees will be let go when the project ends. Severance pay for these employees equals $25,000. If the severance pay is included, what is the new NPV? (Hint: Severance pay is a fixed expense like Selling, General, & Administrative expenses)

As the finance manager of a company, you are presented with the following project. The company is considering the purchase of a new piece of equipment which would cost $210,000. This equipment will have a five-year useful life and have a salvage value of $10,000 at the end of the five-year period. Assume straight-line depreciation It is estimated that

the new equipment will be able to produce 10,000 shelves per year.

the allocated overhead for running the equipment will be $20,000 per year.

they can sell the shelves for $25 each.

the cost of sales is $15 per shelf.

Net Working Capital requirements for the project are as follows:

Year 0 = $10,000

Year 1 = $15,000

Year 2 = $17,000

Year 3 = $15,000

Year 4 = $10,000

The company has a 30% marginal tax rate and a required rate of return of 15%.