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Given the following information, estimate the cashflows of this project and then compute the NPV of thisproject.Estimated Sales: 50,000 units per year for each of the next 3yearsEstimate Sale Price: $1,050 per unitVariable Cost: $1,000 per unitFixed Costs: $1,500,000 per yearInitial Investment in Plant and Machinery: $1,500,000 to bedepreciated to a salvage value of $0 over the next three years. Wesell the machine at $45000 in the market at the end of 3 years.Additions to Net Working Capital: $50,000 at the beginning ofthe projectCorporate Tax Rate: 34%Cost of capital: 18%Sale price will go up by 10% every yearVariable cost will go up by 8% per yearWhat if salvage value is $45,000?
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