Lory Enterprises bought bought land 3 years ago for 1.3 m
believes it could sell for 1.4 m after taxes currently. [an opportunity cost]
a marketing firm had previously been hired [sunk costs]
they will be able to sell their products at 2,800, 3,700, 4,300, and 3,200 units each year for the next four years
the price 550.
sales end after 4 years
fixed costs 375,000
variable costs 20 % of sales
equipment 2.5 million depreciate MACRS over 3 years. scrap value is 350,000.
nwc required immediately is 115,000.
40 % tax rate
required return 12 %
i am calculating the npv
Year Initialy OutlaySales0 $(4,015,000)1$2$3$4$ Cost1,540,0002,035,0002,365,0001,760,000 $$$$ Depr.683,000782,000848,000727,000 $$$$ Profit before tax833,250 $1,111,250…
