You are asked to value a five-year project to build and sell a household-use laser-guided cockroach...

You are asked to value a five-year project to build and sell a household-use laser-guided cockroach search and destroy system. Unit sales are forecasted to be 65,000 units per year. The product will sell for $90 per unit and cost $50 per unit to produce. Other fixed costs are $550,000 per year. Revenues and costs are realized at year-end. The project will be terminated at the end of 5 years. The project requires an immediate investment of $500,000 in working capital. Working capital at the end of years 1 through 4 is equal to 10% of sales. Working capital at the end of year 5 is zero. The equipment necessary to begin production will cost a total of $6,000,000 immediately. This equipment is depreciated to an ending book value of $1,000,000 for tax purposes using the straight-line method over ten years. You assume you can sell the equipment for $4,000,000 after five years. The relevant tax rate (federal plus state) is 25%. The project has a 15% required return. What is the project’s NPV?

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jeff jeffy answered 1 year ago

We project unit sales for a new household-use laser-guided cockroach search and destroy the system as...

We project unit sales for a new household-use laser-guided cockroach search and destroy the system as follows: Year Unit Sales 1 98,000 2 110,000 3 133,000 4 139,000 5 92,000 The new system will be priced to sell at $445 each. The cockroach eradicator project will require $1,600,000 in net working capital to start, and the total net working capital will rise to 15% of the change in sales. The variable cost per unit is $315, and total fixed costs...

We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows:...

We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows: Year Unit Sales 1 98,000 2 110,000 3 133,000 4 139,000 5 92,000 The new system will be priced to sell at $445 each. The cockroach eradicator project will require $1,600,000 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 $315, and total fixed costs are $1,900,000...

We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows:...

We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows: Year Unit Sales 1 94,000 2 106,000 3 129,000 4 135,000 5 88,000 The new system will be priced to sell at $400 each. The cockroach eradicator project will require $1,600,000 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 $275, and total fixed costs are $1,100,000...

We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows:...

We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows: Year Unit Sales 1 99,500 2 111,500 3 134,500 4 140,500 5 93,500 The new system will be priced to sell at $460 each. The cockroach eradicator project will require $1,900,000 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 $330, and total fixed costs are $2,200,000...

In a double-slit interference experiment you are asked to use laser light of different wavelengths and...

In a double-slit interference experiment you are asked to use laser light of different wavelengths and determine the separation between adjacent maxima. You observe that this separation is greatest when you illuminate the double slit with In a double-slit interference experiment you are asked to use laser light of different wavelengths and determine the separation between adjacent maxima. You observe that this separation is greatest when you illuminate the double slit with: 1. yellow light. 2. red light. 3. blue...

A project earns $10,000 a year for five years. The present total value of the project...

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You are asked to build a new hospital: This will be an elderly hospital. And It...

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You are asked to build a new hospital: This will be an elderly hospital. And It...

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You are asked to build a new hospital: This will be a children hospital. And It...

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You are asked to value a five-year project to build and sell a household-use laser-guided cockroach...

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We project unit sales for a new household-use laser-guided cockroach search and destroy the system as...

We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows:...

We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows:...

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