Bmt has developed a new product it can go into


BMT has developed a new product.  It can go into production for an initial investment of $4,500,000.  The equipment will be depreciated using straight-line depreciation over 4 years to a value of zero. The firm believes that net working capital at each date will equal 20 percent of next year's forecast sales. The firm estimates that variable costs are equal to 45% of sales and fixed costs are $400,000 per year. Sales forecasts in dollars are below.  The project will come to an end after 4 years, when the product becomes obsolete. The firm's tax rate is 35 percent, and the discount rate is 8 percent. Calculate the NPV.

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Finance Basics: Bmt has developed a new product it can go into
Reference No:- TGS0965345

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