We project unit sales for a new household-use laser-guided cockroachsearch and destroy system as follows:Year12345Check my workUnit Sales101,000113,000136,000142,00095,000The new system will be priced to sell at $475 each.The cockroach eradicator project will require $2,200,000 in net workingcapital to start, and total net working capital will rise to 15% of the change insales. The variable cost per unit is $345, and total fixed costs are$2,500,000 per year. The equipment necessary to begin production willcost a total of $22 million. This equipment is mostly industrial machineryand thus qualifies for CCA at a rate of 20%. In five years, this equipment willactually be worth about 20% of its cost.The relevant tax rate is 35%, and the required return is 17%. Based on thesepreliminary estimates, what is the NPV of the project? (Enter the answer indollars. Do not round your intermediate calculations. Round the finalanswer to 2 decimal places. Omit $ sign in your response.)NPV

NPV is a capital budgeting tool to decide on whether the capital project should be accepted by the…

Answered: We project unit sales for a new…

We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows: Year 1 2 3 4 5 Unit Sales 101,000 113,000 136,000 142,000 95,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 19P

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