Question

A company is considering a new project requiring an upfront fixed-asset investment of $1,000,000 with an economic life of five years. Depreciation is taken on a straight-line basis, with no expected salvage value. Net working capital required immediately is expected to be $100,000 and will be recovered in full upon the project's completion in five years. In the optimistic-scenario forecast, the annual sales volume is 51,800 units, while the sale price is $134 per unit with a variable cost of $72 per unit. Annual fixed costs are estimated to $1,132,000. If the appropriate discount rate is 12.25% and the tax rate 30%, what is the project's NPV?

Question 18 options:

	$4,166,961
	$4,276,618
	$4,386,274
	$4,495,931
	$4,605,588

Answer 1