Explore BrainMass

Explore BrainMass

    NPV - IRR

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Being taught how to compute the NPV and IRR with the following:
    initial investment outlay of $30 million, consisting of $25 million for equipment and $5 million for net working capital (NWC) (plastic substrate and in 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%

    © BrainMass Inc. brainmass.com June 4, 2020, 4:33 am ad1c9bdddf
    https://brainmass.com/business/financial-ratios/computing-net-present-value-npv-567424

    Attachments

    Solution Summary

    Initial investment outlay of $30 million, consisting of $25 million for equipment and $5 million for net working capital (NWC) (plastic substrate and in inventory); NWC recoverable in terminal year

    $2.19

    ADVERTISEMENT