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…