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What is the net present value of project

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Suppose you are considering opening an electronics retail store, which specializes in printers. Given market research, you think you can sell 20,000 printers in the first year at a price of $60 per printer. Sales are expected to grow by 10% each year following the first year. It costs roughly $48 per printer to make them, and projects such as this typically have a 5-year life. You require a 17 percent return on this product. Fixed costs for the project will run $90,000 per year. Further, you will need to invest a total of $600,000 in manufacturing equipment. Assume that this $600,000 will be 100 percent depreciable over the 5-year life of the project. Finally, the project will require an initial investment of $115,000 in net working capital. The applicable tax rate is 34 percent.

What is the net present value (NPV) of this project?

Reference no: EM132509864

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