(50%) What is the NPV of the proposed Zinser 351 investment?

(30%) Calculate the cash flows of the base (do nothing at the Hunter plant) case and then calculate the cash flows of the investment case (Zinser 351). The incremental cash flows are the basis for the NPV calculation. Show your calculations and your resulting investment NPV. Assume a 36% tax rate and that the firm has sufficient income to use tax benefits and pay taxes at the effective marginal rate. Ignore changes in NWC (primarily inventory levels) based on the comments from the plant manager. (5%) If the Zinser did reduce required raw materials inventory levels, would this help or hurt the investment case? (5%) Given the NPV should you invest? (5%) If you knew the market would collapse in three years based on the elimination of quotas would you change your investment decision? Why? (5%) Is the marketing research cost relevant? Should the cost of the engineering tests be included in the case?