Calculate the npv and irr of the project

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A project requires an initial investment in equipment of $900,000 and then requires an investment in working capital of $100,000 at the beginning (t = 0). The project is expected to produce sales revenues of $300,000 for three years. Manufacturing costs are estimated to be 60% of the revenues. The assets are depreciated using straight-line depreciation. At the end of the project, the firm can sell the equipment for $250,000. The corporate tax rate is 21% and the cost of capital is 9%. (Show Work).

a. Cash flows from the project are:

b. Calculate the NPV and IRR of the project:

c. Calculate the NPV and the IRR of the project if the cost of capital is 12%:

d. What would the NPV and IRR of the project be if the revenues were higher by 10% and the costs were 65% of the revenues (with the cost of capital back to 9%)?

Reference no: EM132154684

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