Yummy Foods is considering a new salsa product whose data are shown below. The equipment...
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Yummy Foods is considering a new salsa product whose data are shown below. The equipment that would be used has a 3-year tax life and would be depreciated by the straight-line method over the projects 3-year life. Revenues and other operating costs are expected to be constant over the projects 3-year life. What is the NPV? (Please be sure to show your calculation)
Hurdle Rate 10%
Net initial investment $60,000
Initial increase in NOWC $10,000
Salvage value $10,000
Sales Revenues $70,000
Operating costs excluding depreciation $30,000
Tax rate 40%
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