Total depreciable cost –Equipment: $200,000 –Shipping and installation: $40,000 •Changesinoperating workingcapital –Inventories will rise by $25,000 –Accounts payable will rise by $5,000 •Effect on...

Total depreciable cost –Equipment: $200,000 –Shipping and installation: $40,000 •Changesinoperating workingcapital –Inventories will rise by $25,000 –Accounts payable will rise by $5,000 •Effect on operations –New sales: 100,000 units/year @ $2/unit

Variable cost: 60% of sales

•Life of the project –Economic life: 4 years –Depreciable life: MACRS 3-year class –Salvage value: $25,000 •Tax rate: 40% •WACC: 10%