Question

In: Finance

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 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

Solutions

Expert Solution

Based on the given data, pls find below workings and NPV:

The NPV of the Project is $ 11021239.81


Related Solutions

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 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...
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...
Projected sales for a new PODS container follows: Year Unit sales 1               $1,750,000 2 2,100,000...
Projected sales for a new PODS container follows: Year Unit sales 1               $1,750,000 2 2,100,000 3 2,450,000 The project will require $250,000 in net working capital to start. Variable costs are 65% of sales, and total fixed costs are $275,000 per year. The cost of equipment is $1,000,000. The equipment qualifies for a CCA rate of 20 percent. The salvage value at the end of 3 years is $450,000.   The relevant tax rate is 30 percent, and the required...
Samsung Inc. estimate unit sales for a new music amplifier as follows: 75,000; 86,000; 95,000; 92,000;...
Samsung Inc. estimate unit sales for a new music amplifier as follows: 75,000; 86,000; 95,000; 92,000; and 73,000 for year 1 through year 5, respectively. Production of the implants will require $1,600,000 in net working capital to start and additional net working capital investments each year equal to 18 percent of the projected sales increase for the following year. Total fixed costs are $1,800,000 per year, variable production costs are $250 per unit, and the units are priced at $340...
Samsung Inc. estimate unit sales for a new music amplifier as follows: 75,000; 86,000; 95,000; 92,000;...
Samsung Inc. estimate unit sales for a new music amplifier as follows: 75,000; 86,000; 95,000; 92,000; and 73,000 for year 1 through year 5, respectively. Production of the implants will require $1,600,000 in net working capital to start and additional net working capital investments each year equal to 18 percent of the projected sales increase for the following year. Total fixed costs are $1,800,000 per year, variable production costs are $250 per unit, and the units are priced at $340...
Aday Acoustics, Inc., projects unit sales for a new seven-octave voice emulation implant as follows: Year...
Aday Acoustics, Inc., projects unit sales for a new seven-octave voice emulation implant as follows: Year Unit Sales 1 75,000 2 88,000 3 102,000 4 97,000 5 78,000 Production of the implants will require $1,540,000 in net working capital to start and additional net working capital investments each year equal to 10 percent of the projected sales increase for the following year. Total fixed costs are $1,440,000 per year, variable production costs are $235 per unit, and the units are...
Aylmer-in-You (AIY) Inc. projects unit sales for a new opera tenor emulation implant as follows: Year...
Aylmer-in-You (AIY) Inc. projects unit sales for a new opera tenor emulation implant as follows: Year Unit Sales 1 99,000 2 113,000 3 123,000 4 143,000 5 88,000 Production of the implants will require $737,000 in net working capital to start and additional networking capital investments each year equal to 20% of the projected sales increase for the following year. (Because sales are expected to fall in Year 5, there is no NWC cash flow occurring for Year 4.) Total...
Aria Acoustics, Inc., (AAI) projects unit sales for a new seven-octave voice emulation implant as follows:...
Aria Acoustics, Inc., (AAI) projects unit sales for a new seven-octave voice emulation implant as follows:    Year Unit Sales 1 110,500 2 129,500 3 117,500 4 100,500 5 86,500 Production of the implants will require $1,750,000 in net working capital to start and additional net working capital investments each year equal to 20 percent of the projected sales increase for the following year. Total fixed costs are $1,400,000 per year, variable production costs are $230 per unit, and the...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT