Reference no: EM132908261

Kopperud Electronics has an investment opportunity to produce a new HDTV. The required investment on January 1 of this year is $140 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 25 percent tax rate. The price of the product will be $455 per unit, in real terms, and will not change over the life of the project. Labor costs for Year 1 will be $15.95 per hour, in real terms, and will increase at 4 percent per year in real terms. Energy costs for Year 1 will be $4.30 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 155,000 175,000 190,000 160,000

Labor input, in hours 1,170,000 1,300,000 1,365,000 1,285,000

Energy input, physical units 215,000 230,000 260,000 245,000

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.)