Question
In: Finance
The Bruin's Den Outdoor Gear is considering a new 7-year project to produce a new tent...
The Bruin's Den Outdoor Gear is considering a new 7-year project to produce a new tent line. The equipment necessary would cost $1.59 million and be depreciated using straight-line depreciation to a book value of zero. At the end of the project, the equipment can be sold for 10 percent of its initial cost. The company believes that it can sell 26,000 tents per year at a price of $69 and variable costs of $29 per tent. The fixed costs will be $445,000 per year. The project will require an initial investment in net working capital of $213,000 that will be recovered at the end of the project. The required rate of return is 11.2 percent and the tax rate is 34 percent. What is the NPV?
Multiple Choice
-
$816,841
-
$1,186,611
-
$660,072
-
$510,939
-
$548,380
Solutions
jeff jeffy answered 15 hours agoRelated Solutions
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The Bruin's Den Outdoor Gear is considering a new 6-year project to produce a new tent...
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to a book value of zero. At the end of the project, the equipment
can be sold for 15 percent of its initial cost. The company
believes that it can sell 23,500 tents per year at a price of $64
and variable costs of $25 per tent. The fixed costs...
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