Reference no: EM132503967
Question - Jacklyn Inc. has an opportunity to sell a newly developed product in Cebu for a period of five years. The product license would be purchased for Mira Company. Jacklyn would be responsible for all distribution and product promotion costs. Mira has the option to renew the agreement, with modifications, at the end of the initial five year term. Jacklyn has developed the following estimated revenues and costs that would be associated with the new product.
Cost of new equipment required P120,000
Additional working capital required 200,000
Salvage value of equipment in Year 5 20,000
Annual revenues and costs:
Sales revenues 400,000
Cost of goods sold 250,000
Out of pocket operating cost 70,000
The working capital required to support the new product would be released for investment elsewhere if the product licensing agreement is not renewed. Ignoring income tax effects, and assuming a 20% cost of capital, what is the NPV of this project?
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: Jacklyn Inc. has an opportunity to sell a newly developed product in Cebu for a period of five years. What is the NPV of this project
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