Find net present value and internal rate of return

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Reference no: EM131276072

Calculate the cash flows of the project given the following assumptions:

• Initial investment outlay of $60 million, comprised of $50 million for machinery with $10 million for net working capital (metal and gemstone inventory)
• Project and equipment life is five years
• Revenues are expected to increase $50 million annually
• Gross margin percentage is 60% (not including depreciation)
• Depreciation is computed at the straight line rate for tax purposes
• Selling, general, and administrative expenses are 5% of sales
• Tax rate is 30%, a reduced rate that reflects a tax credit due to the repurpose of the building

Compute net present value and internal rate of return of the project. You may use Excel to complete this project.

Reference no: EM131276072

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