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Calculating net present value of a project

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Please calculate the net present value (NPV) for the coffee packaging project the coffee packaging production equipment and a lamination machine that will boned plastic substrates for airtight quality. Back in your office, the promised e-mail is in your inbox. Now you can compute the cash flows given the following information: Initial investment outlay of $20 million for equipment only- Project and equipment life: 5 years-Sales projected to be $12 million per year for 5 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%. As I started wondering if this coffee packaging project will maximize the firm's value, I said to myself, I'll compute the NPV and see what it looks like and I will use a weighted average cost of capital (WACC) of 5% and reflected in the attached week 5 NPV IRR.

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The solution assists with calculating the net present value of a project.

Solution provided by:
  • MPhil, Madurai Kamaraj University
  • MCom, Annamalai University
  • IATA, International Air Transport Association
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