New product line in fertilizer business

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Reference no: EM131914498

You are considering the launch of a new product line in your fertilizer business. You have gathered the following information from staff: Required equipment investment $30,000 Projected cash inflow each year, Years 1-8 $20,000 Projected cash outflows each year, Years 1-8 14,000 Salvage value of equipment, end of Year 8 $2,000 In addition, you know the company’s cost of capital is 13%, and have determined to judge this product against a required rate of return of 15%. You also judge projects based on impact per share of the firm’s 1,000 outstanding shares of common stock. Required: (1) Determine the Net Present Value of the project (2) Determine whether the project is acceptable based on NPV (3) Calculate the impact on each share of the firm’s stock

Reference no: EM131914498

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