What would the net present value be at discount rate

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Reference no: EM131010135

You are pondering starting a company that specializes in high-end bicycles. Your initial investment would be $500,000 for depreciable equipment, which should last 5 years, and your tax rate would be 40%. You could sell a bike for $10,000, assuming your average variable cost per bike is $3000, and assuming fixed costs, such as rent, utilities and salaries, would be $200,000 per year.

If you could sell 60 bikes in the first year, and your sales volume increased by 5% each year until the end of year 5, what would the net present value be at a 15% discount rate?

Reference no: EM131010135

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