Question
In: Finance
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?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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...
A project earns $10,000 a year for five years. The present total
value of the project is (using a discount rate of 5.75%):
a) $50,000
b) more than $50,000
c) less than $50,000
The NPV of a project is $1,012, using a discount rate of 9.75%
p.a. The rate of return on this project is:
a) 9.75%
b) more than 9.75% c) less than 9.75%
The NPV of a project is 0, using a discount rate of 10%. The
rate...
You are asked to build a new hospital: This will be an elderly hospital. And It...
You are asked to build a new hospital: This will be an elderly
hospital. And It will be a digital hospital, which will use all
technological facilities. This assignment will be prepared in 2
parts.
a) FİRST PART: Remember all the topics you learned in this
lesson. Plan the technological applications that should be in the
digital hospital you will build using this knowledges.(
Information: This section will be at least “2” pages.)
b) SECOND PART: Using your creativity and...
You are asked to build a new hospital: This will be an elderly hospital. And It...
You are asked to build a new hospital: This will be an elderly
hospital. And It will be a digital hospital, which will use all
technological facilities. This assignment will be prepared in 2
parts.
a) FİRST PART: Remember all the topics you learned in this
lesson. Plan the technological applications that should be in the
digital hospital you will build using this knowledges.(
Information: This section will be at least “2” pages.)
b) SECOND PART: Using your creativity and...
You are asked to build a new hospital: This will be a children hospital. And It...
You are asked to build a new hospital: This will be a
children hospital. And It will be a digital hospital, which will
use all technological facilities. This assignment will be prepared
in 3 parts.
a) FIRST PART: Start with the architectural structure of the
hospital. Using your creativity, build a well-designed hospital for
children with colors, interior and exterior. Do not forget to draft
the architectural structure you designed for homework.
(Information: This section will be at least “3”...
Calculating Salvage Value, An asset used in a four-year project falls in the five-year MACRS class...
Calculating Salvage Value, An asset used in a four-year project
falls in the five-year MACRS class for tax purposes. The asset has
an acquisition cost of $9,300,000 and will be sold for $2,100,000
at the end of the project. If the tax rate is 35 percent, what is
the after tax salvage value of the asset?
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