Reference no: EM132465640

Problem: Kopperud Electronics has an investment opportunity to produce a new HDTV. The required investment on January 1 of this year is $155 million. The firm will depreciate the investment to zero using the straight-line method over four years. The investment has no resale value after completion of the project. The firm has a 23 percent tax rate. The price of the product will be $479 per unit, in real terms, and will not change over the life of the project. Labor costs for Year 1 will be $16.10 per hour, in real terms, and will increase at 2 percent per year in real terms. Energy costs for Year 1 will be $4.42 per physical unit, in real terms, and will increase at 3 percent per year in real terms. The inflation rate is 5 percent per year. Revenues are received and costs are paid at year-end. Refer to the following table for the production schedule:

Year 1   Year 2   Year 3   Year 4     Physical production, in units 161,000   181,000   196,000   163,000     Labor input, in hours 1,200,000   1,360,000   1,368,000   1,288,000     Energy input, physical units 218,000   233,000   263,000   248,000    

The real discount rate for the project is 5 percent.   

Calculate the NPV of this project. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.)