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2. Calculate the Net Present Value (NPV) of the following investment (20 points): Your company is evaluating to invest in the production of energy harvesting
2. Calculate the Net Present Value (NPV) of the following investment (20 points): Your company is evaluating to invest in the production of energy harvesting systems (eg piezoelectric). You expect to generate a $10,000 cash return from sales of energy harvesting products, every year for the next ten years (from year 1 to year 10). The energy harvesting production operating costs will be equal to $2,000 each year (from year 1 to year 10) plus an initial investment of $50,000 (in year 0). Every year (from 1 to 10), you should also pay taxes for 40% (i.e., marginal taxes) as a percentage of profit (G.e, revenues - costs, per year). Finally, in year 10, the production plant is forecasted to be sold for $6,000 (i.e, salvage value). a) Calculate the Net Present Value (NPV) of the investment using 796 as a discount rate would you make this investment? Why? b) Calculate the Internal Rat e of Return [IRR) of the investment and verify that NPV, computed with the new interest rate (IRR), is really equal to zero Taxes are not paid for the salvage value N.B. Please, use Excel spreadsheet in order to compute NPV and IRR values and deliver me also the Excel filel
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