Marketing survey to determine the viability of the product

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Chips Inc. has come up with a new product. Chips paid $134608 for a marketing survey to determine the viability of the product. It is felt that the product will generate sales of $654895 per year. The fixed costs associated with this will be $194639 per year, and variable costs will amount to 28 percent of sales. The equipment necessary for production of the product will cost $837804 and will be depreciated in a straight-line manner for the four years of the product life. This is the only initial cost for the production. Chips is in a 31 percent tax bracket and has a required return of 13 percent. Calculate the NPV.

Reference no: EM131991136

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