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Problem:

Heer Enterprises needs 225,000 cartons of machine screws per year to support its manufacturing needs over the next 7 years. It will cost $1,170,000 to install the equipment necessary to start production; you'll depreciate this cost straight-line to zero over the project's life. Your fixed production costs will be $360,000 per year, and your variable production costs will be $12.75 per carton.The price per carton is $17. Your tax rate is 40 percent and you require a 13 percent return on your investment.

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Question: What is the NPV of this project?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91173438

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