A proposed project to build handicap ramps for side-load vans requires an investment of $1,500,000,...
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A proposed project to build handicap ramps for side-load vans requires an investment of $1,500,000, to be depreciated straight-line over a five-year life to zero. Opportunity cost is 16%. Each electric ramp will sell for $22,000, with variable costs of $14,000. Fixed cost are $300,000 per year. Sales are anticipated at 500 units for the five years, or 100 per year. Ignore taxes.
The total contribution margin in dollars per year is:
A. $500,000
B. $300,000
C. $1,100,000
D. $800,000
The NPV is ________
I like to see the work, but the answers are $800,000 and $137,147.83 respectively.
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