Reference no: EM132910342

Benny currently works for WasteMagic Inc, a company that collects e-waste and turns it magically into garden equipment. The company is thinking about opening another manufacturing plant in Adelaide. The company employed ConsultMe to conduct a feasibility study.

The cost of this study was $10,000 and provided the following information:

• Revenue resulting from the new plant is expected to be $ 743,000 per year and yearly costs to be $ 468,000. The revenue from another plant the company owns just outside of Adelaide is expected to go down by $12,000/yr. The new plant is expected to operate for 7 years, and both the revenues and costs are expected to remain constant.
• The plant will costs $1,378,000 and ATO rules require that the plant be depreciated to zero over 7 years. At the end of the 7 years, the company expects to be able to sell the plant for $ 73,000. The project will also require an initial working capital of $5,000, which will be recovered at the end of the project.

Problem 1: Assuming a tax rate of 35% and a required return of 6% p.a., what is the expected NPV? Round your answer to two decimals.