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Investment Inventory

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A new investment in inventory being considered by Quincy Corporation requires an initial outlay of $100,000 on January 1, year 1. The inventory is expected to be liquidated at the end of 5 years for $80,000. This investment is expected to generate the following additional revenues and expenses:

Year 1 2 3 4 5
Revenues 6,000 10,000 28,000 38,000 25,000

Expenses 3,000 5,000 14,000 19,000 19,000

Liquidation loss 20,000

At a 40% income tax rate and a 10% required rate of return, is the investment attractive?

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https://brainmass.com/business/inventory/investment-inventory-330759

Solution Summary

Investment inventory is examined for Quincy Corporation.

$2.19