Compute cash flows - npv and irr of the project

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Reference no: EM13670639

Initial investment outlay of $30 million, consisting of $25 million for equipment and $5 million for net working capital (NWC) (plastic substrate and ink inventory); NWC recoverable in terminal year

Project and equipment life: 5 years

Sales: $25 million per year for five years

Assume gross margin of 60% (exclusive of depreciation)

Depreciation: Straight-line for tax purposes

Selling, general, and administrative expenses: 10% of sales

Tax rate: 35%

Use a WACC of 10%.

Compute, cash flows, NPV and IRR of the project using the Excel spreadsheet. (Use the IRR financial function for the computation of IRR.)

Reference no: EM13670639

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