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Category > Business & Finance Posted 15 Jul 2017 My Price 12.00

Ms. Thompson, as the CFO of a clock maker,

Ms. Thompson, as the CFO of a clock maker, is considering an investment of a $420,000 machine that has a seven-year life and no salvage value. The machine is depreciated by a straight-line method with a zero salvage over the seven years. The appropriate discount rate for cash flows of the project is 13 percent, and the corporate tax rate of the company is 35 percent. Calculate the NPV of the project in the following scenario. What is your conclusion about the project?

 

Pessimistic

Expected

Optimistic

Unit sales

23,000

25,000

27,000

Price

$ 38

$ 40

$ 42

Variable costs

$ 21

$ 20

$ 19

Fixed costs

$320,000

$300,000

$280,000

Answers

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Status NEW Posted 15 Jul 2017 10:07 AM My Price 12.00

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