Owners decide that he wants to go ahead with manufacturing

Reference no: EM13370529

Owners decide that he wants to go ahead with manufacturing; he must spend $900,000 for the new equipment, legal fees of $50,000, start-up cost, $50,000. The formula may net the company an estimate $375,000 in the first year, $425,000 in year two, and $500,000 in the third year for the 3-year life of the method. The owner's cost of capital is based on the subsequent: Rrf: 3.625, B: 1.00, Rm: 13.875. Suppose that cash flow occurs at the end of the year.

Evaluate the NPV for this project. Should it be undertaken?

Reference no: EM13370529

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