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In: Finance
Shade Your Eyes, Inc. makes sunglasses that cost $115 per pair. They want to buy equipment...
Shade Your Eyes, Inc. makes sunglasses that cost $115 per pair. They want to buy equipment necessary to reduce their costs by $1 per pair. It will cost $350,000 and will be depreciated on a straight-line basis over the 6-year life of the machine. There is no increase in Net Working Capital for this project. The margin before is $310,900, and with the new machine it will increase to $475,100.
The required return is 15%, and the tax rate is 40%.
You want to determine if you should buy this new equipment.
13)What is the NPV of this investment (8 points)?
round to nearest dollar. enter the number with commas if necessary.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Shade Your Eyes, Inc. makes sunglasses that cost $115 per pair. They want to buy equipment...
Shade Your Eyes, Inc. makes sunglasses that cost $115 per pair.
They want to buy equipment necessary to reduce their costs by $1
per pair. It will cost $350,000 and will be depreciated
on a straight-line basis over the 6-year life of the
machine. There is no increase in Net Working
Capital for this project. The margin before is $310,900,
and with the new machine it will increase to $475,100.
The required return is 15%, and the tax rate is 40%.
You want...
Shade Your Eyes, Inc. makes sunglasses that cost $115 per pair. They want to buy equipment...
Shade Your Eyes, Inc.
makes sunglasses that cost $115 per pair. They want to buy
equipment necessary to reduce their costs by $1 per
pair. It will cost $350,000 and will be depreciated on a
straight-line basis over the 6-year life of the
machine. There is no increase in Net Working
Capital for this project. The margin before is $310,900,
and with the new machine it will increase to $475,100.
The required return is
15%, and the tax rate is 40%.
You
want...
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Jasper McKnight Sunglasses sell for about $150 per pair. Suppose the company incurs the following average...
Jasper McKnight Sunglasses sell for about $150 per pair. Suppose
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Direct materials
......................................................................................
$40
Direct labor
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12
Variable manufacturing overhead
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Variable marketing expenses
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1) Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $1.55 per unit,...
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