Prepare a five year schedule showing cash flow to the firm

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Joe is thinking about expanding his business. Business plan as follows:

Initial investment of $2 million for PP&E, depreciated straight line over 10 years 5 year life

Revenue of $1.2 million in the first year, grows at 5%/year

Expenses = 55% of revenue (does not include depreciation)

NWC for each year must be 10% of that year's revenues. Assume return of NWC at end of 5 years

Tax rate = 40%

Hurdle rate = 8%

Prepare a 5 year schedule showing cash flow to the firm. Calculate NPV, IRR

Reference no: EM13990905

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