Adequate information: Net-working required at the beginning = $45,000 Unit sales in Year 1 = 10,400 units Growth rate = 8% Selling price per unit = $61 Cost of asset = $575,000 Useful life of asset = 5 years Variable cost per unit = $19 Annual fixed cost = $125,000 Tax rate = 21% To determine: NPV of the project Introduction: NPV is the difference between the present value of aggregate cash inflows and cash outflows. It is a capital budgeting technique used to evaluate various investment proposals.

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Chapter 6, Problem 27QAP

Summary Introduction

Adequate information:

Net-working required at the beginning = $45,000

Unit sales in Year 1 = 10,400 units

Growth rate = 8%

Selling price per unit = $61

Cost of asset = $575,000

Useful life of asset = 5 years

Variable cost per unit = $19

Annual fixed cost = $125,000

Tax rate = 21%

To determine: NPV of the project

Introduction: NPV is the difference between the present value of aggregate cash inflows and cash outflows. It is a capital budgeting technique used to evaluate various investment proposals.

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