What is the net present value of the project

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Reference no: EM131492530

The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $40. The unit cost of the giftware is $20. Year Unit Sales

1 23,000

2 31,000

3 15,000

4 6,000

Thereafter 0 It is expected that net working capital will amount to 20% of sales in the following year. For example, the store will need an initial (Year 0) investment in working capital of .20 × 23,000 × $40 = $184,000. Plant and equipment necessary to establish the giftware business will require an additional investment of $201,000. This investment will be depreciated using MACRS and a 3-year life. After 4 years, the equipment will have an economic and book value of zero. The firm’s tax rate is 30%. What is the net present value of the project? The discount rate is 20%. Use the MACRS depreciation schedule. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

Reference no: EM131492530

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