The managers of PonchoParts, Inc. plan to manufacture engine blocks for classic cars from the 1960s era. They expect to sell 250 blocks annually for the next ﬁve years. The necessary foundry
And machining equipment will cost a total of $800,000 and belongs in a 30% CCA class for tax
Purposes. The ﬁrm expects to be able to dispose of the manufacturing equipment for $150,000 at
The end of the project. Labour and materials costs total $500 per engine block, ﬁxed costs are
$125,000 per year. Assume a 35% tax rate and a 12% discount rate.
Assume that management believes that auto restorers will pay $3,000 retail per engine block. What
Is the NPV of this project?

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The Answer of The managers of PonchoParts, Inc. plan to manufacture engine blocks for classic cars from the 1960s era. They expect to sell 250 blocks annually for the next ﬁve years. The necessary foundry
And machining equipment will cost a total of $800,000 and belongs in a 30% CCA class for tax
Purposes. The ﬁrm expects to be able to dispose of the manufacturing equipment for $150,000 at
The end of the project. Labour and materials costs total $500 per engine block, ﬁxed costs are
$125,000 per year. Assume a 35% tax rate and a 12% discount rate.
Assume that management believes that auto restorers will pay $3,000 retail per engine block. What
Is the NPV of this project?

The Managers of PonchoParts, Inc