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4. (20 points) The XYZ company expects to have the sales forecast, which is provided in the table below, for a new scooter. While the unit price of the scooter is $40, the unit cost is $25. Moreover, it is expected that net working capital will amount to 20% of sales in the following year. Note that the company also need an initial (year-0) investment in working capital. Plant and equipment necessary to produce the scooter will require an additional investment of $200,000 in year 0 . This investment will be depreciated over 4 years to a salvage value of zero using straight-line depreciation method. The tax rate is 40% and discount rate is 10%. Will you accept the new scooter project according to its net present value? 18:14 4. (20 points) The XYZ company expects to have the sales forecast, which is provided in the table below, for a new scooter. While the unit price of the scooter is $40, the unit cost is $25. Moreover, it is expected that net working capital will amount to 20% of sales in the following year. Note that the company also need an initial (year-0) investment in working capital. Plant and equipment necessary to produce the scooter will require an additional investment of $200,000 in year 0 . This investment will be depreciated over 4 years to a salvage value of zero using straight-line depreciation method. The tax rate is 40% and discount rate is 10%. Will you accept the new scooter project according to its net present value? 18:14

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