Proposed investment has an equipment cost

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A proposed investment has an equipment cost of $1380800. The cost will be depreciated straight line to a zero salvage value over its 15 year life. The firm will also use their existing, but currently unused, equipment that has been fully depreciated but has a market value of $37000. Cash sales will be $223690 per year and variable cost will run $98469 per year. Fixed cost is $56400 per year. The firm will also need to invest $45331 in net working capital. marketing research for this project was $46500 last year and on going marketing ads will cost $7000 per year. The appropriate discount rate is 7.4% and the corporate marginal tax rate is 33% while the average tax rate is 36%.

What is the NPV?

Reference no: EM131888640

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