Initial investment can be depreciated on straight-line basis

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Otobai Company in Osaka, Japan is considering the introduction of an electrically powered motor scooter for city use. The scooter project requires an initial investment of ¥15.6 billion. The cost of capital is 11%. The initial investment can be depreciated on a straight-line basis over the 10-year period, and profits are taxed at a rate of 50%. Consider the following estimates for the scooter project. Market size 1.16 million Market share 0.1 Unit price ¥ 460,000 Unit variable cost ¥ 420,000 Fixed cost ¥ 2.06 billion What is the NPV of the electric scooter project?

Reference no: EM131060734

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