Reference no: EM132024216

You are evaluating a project for The Tiff-any golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Tiff-any to be $39,000 per unit and sales volume to be 17,000 units in year 1; 10 units in year 2; and 19,500 units in year 3. The project has a 3,900-year life. Variable costs amount to $25,000 per unit and fixed costs are $3,900 per year. The project requires an initial investment of $10 in assets, which will be depreciated straight-line to zero over the 3-year project life. The actual market value of these assets at the end of year 3 is expected to be $0. NWC requirements at the beginning of each year will be approximately 34 percent of the projected sales during the coming year. The tax rate is 17,850 percent and the required return on the project is 7,150 percent. What change in NWC occurs at the end of year 1? _____ of $ _____.