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In: Finance
I need the NPV of this project. Tax Rate is 40% and the WACC is 11.49%...
I need the NPV of this project. Tax Rate is 40% and the WACC is 11.49%
This project requires an initial investment of $2,000,000 in
equipment which will cost an additional $250,000 to install. The
firm will use the attached MACRS depreciation schedule to expense
this equipment. Once the equipment is installed, the company will
need to increase net working capital by $100,000. The project will
last 6 years at which time the market value for the equipment will
be $30,000.
The project will project a product with a sales price of $120.00
per unit and the variable cost per unit will be $65.00. The fixed
costs would be $500,000 per year. Because this project is very
different to current products sold by the business, management has
imposed a 2 percentage point premium above its current WACC as the
valuation hurdle it must meet or surpass.
Years 2014 2015 2016 2017 2018 2019 Forecasted Units Sold 21,000
55,000 44,000 28,000 25,000 11,000
Solutions
jeff jeffy answered 1 hour agoRelated Solutions
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