Reference no: EM132914234

Consider the following investment in a manufacturing facility:

capital cost is $250 million, all of which can be depreciated in equal amounts for tax over ten years;

working capital of $65 million;

tax rate of 30 percent; and

net revenue of $45 million in the first year growing at 3 percent PA.

The investor can borrow unlimited funds at 6 percent PA; and their discount rate for similar investments is 15 percent.

Problem 1: Calculate the net present value of the investment.