Variation on its eats food-delivery platform

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Reference no: EM131995543

A major ride-sharing company is considering a variation on its "Eats" food-delivery platform. Annual sales of $31,514,275 and costs of $8,462,305 will be incurred for this "BrUber" product extension, which delivers...well, you can guess. The planning horizon is 5 years. The project will require $800,000 in net working capital. The initial capital expenditure is $3,900,000. The project will be depreciated using the MACRS-3 schedule, which is (0.3333 0.4445 0.1481 0.0741). At the end of the project, there will be $1,500,000 pre-tax salvage value. The tax rate is 0.27. Venture capitalist backing this company expect a 0.23 rate of return. What is the NPV?

Reference no: EM131995543

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