We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows: Year
Question:
We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows: Year Unit Sales 1 95,000 2 107,000 3 130,000 4 136,000 5 89,000 The new system will be priced to sell at $415 each. The cockroach eradicator project will require $1,800,000 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 $285, and total fixed costs are $1,300,000 per year. The equipment necessary to begin production will cost a total of $16 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 17%. Based on these preliminary estimates,
Requirement :
what is the NPV of the project?
Systems Analysis And Design
ISBN: 978-1119496489
7th Edition
Authors: Alan Dennis, Barbara Wixom, Roberta M. Roth