I know how to do the first part.
I do not know how to get the NPV without the discount rate. Please help :)
A company will sell Gizmos to consumers at a price of $112 per unit. The variable cost to produce Gizmos is $47 per unit. The company expects to sell 19,000 Gizmos to consumers each year. The fixed costs incurred each year will be $230,000. There is an initial investment to produce the goods of $3,800,000 which will be depreciated straight line over the 10-year life of the investment to a salvage value of $0. The opportunity cost of capital is 10% and the tax rate is 33%.
What is the operating cash flow each year? $798,750
Correct response: $798,750
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Using an annual operating cash flow of $798,750, what is the net present value of this investment? Number
Should the company accept or reject this project?
Reject
Accept
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