Evaluating project for ultimate recreational tennis racket

Assignment Help Financial Management

Reference no: EM13910895

You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $400 and sales volume to be 1,000 units in year 1, 1,250 units in year 2, and 1,325 units in year 3. The project has a 3 year life. Variable costs amount to $225 per unit and fixed costs are $100,000 per year. The project requires an initial investment in equipment of $165,000 which is depreciated straight-line to zero over the 3 year project life. The actual market value of the equipment at the end of year 3 is $35,000. Initial (t=0) net working capital (NWC) investment is $80,000 and NWC will maintain a level equal to 20% of the next year’s sales each year thereafter. The tax rate is 35% and the required return on the project is 10%. What is the NPV of this project?

Reference no: EM13910895

Questions Cloud

What is a reverse 911 service : What is a reverse 911 service? Give two examples of how such a system might be used.

Prepare a job cost sheet for each job worked : Widmer Watercraft's predetermined overhead rate for year 2013 is 200% of direct labor. Information on the company's production activities during May 2013 follows.

Corporate bond with a face value : A corporate bond with a face value of $1,000 matures in 4 years and has an 8% coupon paid at the end of each year. What is the price of this bond if the yield to maturity is 10.15%?

Identify two approaches to securing the transmission : Identify two approaches to securing the transmission of confidential data.

Evaluating project for ultimate recreational tennis racket : You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $400 and sales volume to be 1,000 units in year 1, 1,250 units in year 2, and 1,32..

Identify four common smartphone platforms : Define the term smartphone. Identify four common smartphone platforms.

What is the difference between guided and unguided : What is the difference between guided and unguided transmission media?

Assume annual compounding : The great, great grandparents of one of your classmates sold their factory to the government 104 years ago for $150,000. If these proceeds had been invested at 6%, how much would this legacy be worth today? Assume annual compounding.

User Account

All Pages