Medavoy Company is considering a new project that complements its existing business.
The machine required for the project costs $ million. The marketing department
predicts that sales related to the project will be $ million per year for the next four
years, after which the market will cease to exist. The machine will be depreciated to zero
over its year economic life using the straightline method. Cost of goods sold and
operating expenses related to the project are predicted to be percent of sales. The
company also needs to add net working capital of $ immediately. The additional
net working capital will be recovered in full at the end of the project's life. The corporate
tax rate is percent and the required return for the project is percent. What is the
value of the NPV for this project? Do not round intermediate calculations and enter
your answer in dollars, not millions of dollars, rounded to decimal places, eg
NPV
Should the company proceed with the project?
Yes
No
