Find the npv of the given project

Assignment Help Finance Basics

Reference no: EM131978843

Question: With the growing popularity of casual surf print clothing, two recent MBA graduates decided to broaden this casual surf concept to encompass a "surf lifestyle for the home." With limited capital, they decided to focus on surf print table and floor lamps to accent people's homes. They projected unit sales of these lamps to be 8,200 in the first year, with growth of 6 percent each year for the following four years (Years 2 through 5).

Production of these lamps will require $47,000 in networking capital to start. Total fixed costs are $107,000 per year, variable production costs are $14 per unit, and the units are priced at $42 each. The equipment needed to begin production will cost $187,000. The equipment will be depreciated using the straight-line method over a five-year life and is not expected to have a salvage value. The effective tax rate is 35 percent, and the required rate of return is 23 percent. What is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Reference no: EM131978843

Questions Cloud

What is the value of the retained earnings account : What is the value of the retained earnings account for the December 31, 2016 statement of financial position?

Which course of action do you recommend : Grupo Modelo S.A.B de C.V. Gurop Modelo, a brewery out of Mexico a brewery out of Mexico that exports such well-known varities as Corona, Modelo, and Pacifico.

Briefly describe to report on the ethical standards : Briefly describe that you are going to report on the ethical standards and actions of the major internet companies - Briefly describe how each compare

What is the company unlevered cost of equity capital : What is the company’s unlevered cost of equity capital? What is the company’s cost of equity capital?

Find the npv of the given project : Production of these lamps will require $47,000 in networking capital to start. Total fixed costs are $107,000 per year, variable production costs are $14.

What is the dollar amount of working capital : The Griswold Co. produces 1, 500 batteries per day at a cost of $6 per battery for materials and labor It takes the firm 22 days to convert raw materials.

Assume the firm pays no dividends : What is the total external financing needed if sales increase 25%? Assume the firm pays no dividends.

Describe the typical behaviors : Describe the typical behaviors that such a client might emit during periods of emotional stress or when encountering stressful or anxiety producing events

Conduct adequate sensitivity analyses : Conduct adequate sensitivity analyses of how factors that were problematic in estimation of WACC will affect your computations.

User Account

All Pages