Use laser-guided cockroach search and destroy system

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Reference no: EM131933507

We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows: Year Unit Sales 1 103,000 2 115,000 3 138,000 4 144,000 5 97,000 The new system will be priced to sell at $495 each. The cockroach eradicator project will require $1,800,000 in net working capital to start, and total net working capital will rise to 15 percent of the change in sales. The variable cost per unit is $365, and total fixed costs are $2,900,000 per year. The equipment necessary to begin production will cost a total of $24 million. This equipment is mostly industrial machinery and thus qualifies for CCA at a rate of 20 percent. In five years, this equipment will actually be worth about 20 percent of its cost. The relevant tax rate is 35 percent, and the required return is 15 percent. Based on these preliminary estimates, what is the NPV of the project? (Enter the answer in dollars. Do not round your intermediate calculations. Round the final answer to 2 decimal places.)

Reference no: EM131933507

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