In: Finance
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 per year. The equipment necessary to begin production will cost a total of $21 million. This equipment is mostly industrial machinery and thus qualifies for CCA at a rate of 20%. In five years, this equipment will actually be worth about 20% of its cost.
The relevant tax rate is 35%, and the required return is 14%. Based on these preliminary estimates, what is the NPV of the project? (Enter the answer in dol
Based on the given data, pls find below workings and NPV:
The NPV of the Project is $ 11021239.81