Based on the following information for project X, should we undertake the venture? (Use NPV...
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Based on the following information for project X, should we undertake the venture? (Use NPV technique). Project X involves a new type of design. We think we can sell 6,000 units per year at a price of 1 each. Variable costs will run about 0.4 per unit, and the product should have a four-year life. Fixed costs for the project will run 450 per year. Further, we will need to invest a total of 4000 in manufacturing equipment and would be depreciated to zero residual value over four years using the straight-line depreciation method. We will have to invest 3000 in net working capital at the start. After that, net working capital requirements will be 25 percent of sales. (Tax rate 20 percent)
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