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According to preliminary estimates, the installation of an industrial plant requires an initial investment of L3,000,000. The estimated selling price for the product is L15.00

According to preliminary estimates, the installation of an industrial plant requires an initial investment of L3,000,000. The estimated selling price for the product is L15.00 per unit. Projections have estimated the following behavior in the main financial variables:

YEAR

Details

Units

1

2

3

4

5

sales

1000 un.

180

200

200

240

260

production costs

thousands L.

750

800

850

900

950

Selling and adm. expenses

thousands L.

300

330

360

390

420

financial costs

thousands L.

100

95

90

85

80

income tax

thousands L.

390

440

500

560

610

If the minimum acceptable rate of return for this project is set to 40%, should this be implemented? project based on this information? (Use internal rate of return as criteria)

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