Concept to encompass surf lifestyle for the home

Assignment Help Financial Management

Reference no: EM131856831

With the growing popularity of casual surf print clothing, two recent MBA graduates decided to broaden this casual surf concept to encompass a “surf lifestyle for the home.” With limited capital, they decided to focus on surf print table and floor lamps to accent people’s homes. They projected unit sales of these lamps to be 7,100 in the first year, with growth of 5 percent each year for the following four years (Years 2 through 5). Production of these lamps will require $36,000 in networking capital to start. Total fixed costs are $96,000 per year, variable production costs are $10 per unit, and the units are priced at $38 each. The equipment needed to begin production will cost $176,000. The equipment will be depreciated using the straight-line method over a five-year life and is not expected to have a salvage value. The effective tax rate is 35 percent, and the required rate of return is 25 percent. What is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Reference no: EM131856831

Questions Cloud

Discuss about the culturally dominant values : Identify how the culturally dominant values outlined by Schofield Clark (e.g., individualism, freedom, etc.) connect to early ideas found in Protestantism.

Difference between a market economy and command economy : What is the major difference between a market economy (capitalism) and a command economy? Give an example of each, from history or from present day

Four-year economic life and residual value : A company plans to buy a machine worth $ 300 million with a 4-year economic life and residual value of $ 20 million.

How our central bank affects not only us economic activity : discuss how our central bank affects not only U.S. economic activity but asset prices, including equity markets.

Concept to encompass surf lifestyle for the home : two recent MBA graduates decided to broaden this casual surf concept to encompass a “surf lifestyle for the home.”

Precipitation to evaporate even before reaching the ground : When the air is too dry, it causes the precipitation to evaporate even before reaching the ground. What is the term given to this?

Very cold surfaces such as high cloud tops : Very cold surfaces such as high cloud tops, emitting little infrared radiation appear [(Bright white)(dark)]. Surfaces with intermediate termperatures appear

Provide a definition of air pressure that applies to earth : Provide a definition of air pressure that applies to Earth's surface and any altitude within the atmosphere.

Considering investing in machine to produce keyboards : Dickinson Brothers, Inc., is considering investing in a machine to produce computer keyboards. What is the NPV of the investment?

User Account

All Pages