We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows: Year Unit Sales 1 97,000 2 109,000 3 132,000 4 138,000 5 91,000 The new system will be priced to sell at $435 each. The cockroach eradicator project will require $2,200,000 in net working capital to start, and total net working capital will rise to 15% of the change in sales. The variable cost per unit is $305, and total fixed costs are $1,700,000 per year. The equipment necessary to begin production will cost a total of $18 million. This equipment is mostly industrial machinery and thus qualifies for CCA at a rate of 20%. In five years, this equipment will actually be worth about 20% of its cost. The relevant tax rate is 35%, and the required return is 15%. Based on these preliminary estimates, what is the NPV of the project? (Enter the answer in dollars. Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $
We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows:
| Year | Unit Sales |
| 1 | 97,000 |
| 2 | 109,000 |
| 3 | 132,000 |
| 4 | 138,000 |
| 5 | 91,000 |
The new system will be priced to sell at $435 each.
The cockroach eradicator project will require $2,200,000 in net working capital to start, and total net working capital will rise to 15% of the change in sales. The variable cost per unit is $305, and total fixed costs are $1,700,000 per year. The equipment necessary to begin production will cost a total of $18 million. This equipment is mostly industrial machinery and thus qualifies for CCA at a rate of 20%. In five years, this equipment will actually be worth about 20% of its cost.
The relevant tax rate is 35%, and the required return is 15%. Based on these preliminary estimates, what is the
NPV $
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