Axillar beauty products corporation is considering the

Reference no: EM13600012

Axillar Beauty Products Corporation is considering the production of a new conditioning shampoo that will require the purchase of new mixing machinery. The machinery will cost $375,000, is expected to have a useful life of 10 years, and is expected to have a salvage value of $50,000 at the end of 10 years. The machinery will also need a $35,000 overhaul at the end of Year 6. A $40,000 increase in working capital will be needed for this investment project. The working capital will be released at the end of the 10 years. The new shampoo is expected to generate net cash inflows of $85,000 per year for each of the 10 years. Axillar's discount rate is 16%.

Required:
(a) What is the net present value of this investment opportunity?
(b) Based on your answer to (a) above, should Axillar go ahead with the new conditioning shampoo?

Reference no: EM13600012

Questions Cloud

Toys r us is considering placing an advertisment for their : toys r us is considering a new iphone app for managers that calculates break even points so that mba students no longer

Lambert invests 10000 for a 13 interest in a partnership in : lambert invests 10000 for a 13 interest in a partnership in which the other partners have capital totaling 26000 before

What other critical background information might you want : the following table contains calculations of several key ratios for indianola pharmaceutical company a maker of

Burger palace corporation reports a net cash used for : burger palace corporation reports a net cash used for investing activities of 3.4 million and a net cash provided by

Axillar beauty products corporation is considering the : axillar beauty products corporation is considering the production of a new conditioning shampoo that will require the

What is the amount of the payments that ned winslow must : using the appropriate interest table provide the solution to each of the following four questions by computing the

Equity corp paid a consultant to study the desirability of : equity corp. paid a consultant to study the desirability of installing some new equipment. the consultant recently

Abc company has the following costs related to its : abc company has the following costs related to its manufacturing process supervisor salaries 100000 utilities 30000

Abc company has an effective tax rate of 40 if they have : abc company has an effective tax rate of 40. if they have fixed cost of 30000 and want an after tax profit of 65000

User Account

All Pages