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How do compute the project irr and npv

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Reference no: EM132982486

Here's information regarding the coffee packaging project:

Initial investment outlay of $40 million, consisting of $35 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: $27 million per year for five years

Assume gross margin of 50% (exclusive of depreciation)

Depreciation: Straight-line for tax purposes

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

Tax rate: 35%

Assume a WACC of 10%.

Problem 1: Compute the project's IRR and NPV.

Reference no: EM132982486

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