Power Pointer Inc is considering the development of a presentation projector device. ◦ The sales forecast for this devic

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Power Pointer Inc is considering the development of a
presentation projector device.
◦ The sales forecast for this device is 40,000 units per year.
Power Pointer expects the product will have a
three-year life and a wholesale price of $500 and production cost
of $250 per unit.
◦ Power Pointer will need to purchase a new piece of equipment for
$15 million of new equipment for this
project.
◦ The equipment will be depreciated using the straight-line method
over a 3-year life. Power Pointer’s
marginal tax rate is 35%.
◦ Find the NPV for this project, and decide whether Power Pointer
should accept this project.