1. The project life is ten years with no salvage value

2. Inflation in the US is expected to be 3% annually

3. The plant will cost $4,000,000 to construct and will be incurred in Year 0

4. Estimated sales for sweaters from your plant in Year 1 are projected to be 100,000. Growth is estimated at 5% annually

5. Sweaters will be priced at $30 each in Year 1

6. Wool costs $9/pound in the US in Year 1

7. Each sweater requires 2 pounds of wool

8. Labor costs in the US are $8/hr in Year 1

9. Labor productivity in the U.S. is 4-sweaters per hour

10. Assume a corporate tax rate of 35%

11. Depreciation is on a straight line basis over 5 years with no salvage value

12. The risk free rate of return is 3%

13. The S&P 500 has been returning 8%

14. Your firm typically returns about 20% more than the S&P500