4. A product line can sell 100,000 products per year for 4 years (after which...
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4. A product line can sell 100,000 products per year for 4 years (after which time this project is expected to shut down). The product will sell for $7 each, with variable costs of $4 for each one produced, while annual fixed costs associated with production will be $90,000. In addition, there will be a $553,000 initial expenditure associated with the purchase of new production equipment. It assumed that this initial expenditure will be depreciated using the SL method over 4 years. There is no salvage, nor initial net working capital associated with inventory. The required rate of return is 10%. Tax rate is 21%. What is the NI in year 2?
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