Answer:
Garida Co.
The project's net present value (NPV) is:
= $57,787
Explanation:
a) Data and Calculations:
                                            Year 1       Year 2      Year 3      Year 4
Unit sales                           4,200         4,100       4,300        4,400
Sales price                       $29.82     $30.00      $30.31       $33.19
Variable cost per unit       $12.15      $13.45      $14.02       $14.55
Fixed operating costs   $41,000    $41,670    $41,890    $40,100
                                           Year 1        Year 2      Year 3        Year 4
Sales Revenue              $125,244   $123,000  $130,333   $146,036
Variable costs                  $51,030     $55,145   $60,286    $64,020
Fixed operating costs     $41,000     $41,670     $41,890     $40,100
Total costs                      $92,030     $96,815   $102,176    $104,120
Income before tax          $23,214      $26,185    $28,157      $41,916
Income tax (25%)               5,804          6,546       7,039        10,479
Net income/cash inflow  $17,410      $19,639     $21,118      $31,437
PV factor                           0.901          0.812          0.731        0.659
Present value                $15,686      $15,947    $15,437      $20,717
Total present value of the cash inflows = $67,787
Less investment cost of equipment =         10,000
Project's net present value (NPV) =          $57,787