Leather Goods Inc. wants to expand its product line into wallets. It is considering producing 50,000 units per year. The price will be $15 per wallet the first year and the price will increase 3% per year. The variable cost is expected to be $10 per wallet and will increase by 5% per year. The machine will cost $400,000 and will have an economic life of 5 years. It will be fully depreciated using the straight line method. The discount rate is 15% and the corporate tax is 34%. What is the NPV of the investment?
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2020-11-17T07:45:35-0500
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