Use the information given to compute the net present value for the project. Company has developed Project X. The key financial data are presented below
 

Transcribed Image Text:

• An investment of $150,000,000 in capital equipment is required. • An investment of $40,000,000 in working capital is required. • Annual sales are 100,000 units at a price of $2,200 per unit. • The variable cost for each unit is $1,250. • Fixed costs are $36,000,000 per year. • Depreciation of the capital equipment is straight-line-to-zero. • The corporate taxation rate is 30 percent. • The discount rate that should be applied to the project is 19 percent. • The project has a life of 11 years. • All working capital is returned at the end of the project. • An investment of $150,000,000 in capital equipment is required. • An investment of $40,000,000 in working capital is required. • Annual sales are 100,000 units at a price of $2,200 per unit. • The variable cost for each unit is $1,250. • Fixed costs are $36,000,000 per year. • Depreciation of the capital equipment is straight-line-to-zero. • The corporate taxation rate is 30 percent. • The discount rate that should be applied to the project is 19 percent. • The project has a life of 11 years. • All working capital is returned at the end of the project.

Answer rating: 100% (QA)

Annual net income Annual sales Unit price Variable cost per unit Annual sales Fixed costs Annual sal... View the full answer