Santo Automotive is considering producing a new automobile product, No Text, which disengages the ability...
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Santo Automotive is considering producing a new automobile product, No Text, which disengages the ability to text while driving. Marketing data indicate that the company will be able to sell 39,000 units per year at $16 each. The product will be produced in a section of an existing factory that is currently not in use. To produce No Text, Santo must buy a machine that costs $820,000. The machine has an expected life of five years and will have an ending residual value of $50,000. Santo expects to generate net income of $56,000 per year. The income tax rate is 30% and the companys required rate of return is 10%. How much is the net present value?
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