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Computing the including net present value

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Reference no: EM132899700

Question 1: Having trouble computing the including net present value (NPV), internal rate of return (IRR), payback period, and profitability index (PI) Expansion Into Three Additional States.

  1. Expansion into three additional states has a forecast to increase sales/revenues and cost of sales by 10% per year for 5 years.
  2. Annual sales for the previous year were $20 million.
  3. Start-up costs are projected to be $7 million and an upfront needed investment in net working capital of $1 million. The working capital amount will be recouped at the end of year 5.
  4. The marginal corporate tax rate is presumed to be 25%.
  5. Being a risky investment, the required rate of return of the project is 12%.

Reference no: EM132899700

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