Question details

FINC 615 NPV-IRR IP 4
$ 10.00

·         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%

Available solutions