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An investment plan to build a manufacturing facilities has the followings construction schedule and costs: year 1 2 3 4 5 construction 20 40
An investment plan to build a manufacturing facilities has the followings construction schedule and costs: year 1 2 3 4 5 construction 20 40 50 50 30 millon cost when the construction is completed, the facilities will be operational for 15 years, the projected annual revenue during the operation period is $30million at the first year, and then increase at the 10% growth rate per year.the annual operating cost including labor,row material, and O&M cost is 5 million at the first year, and then increase at a 12% growth rate per year. The working capital for operation is $5million and increase at a 5% growth rate per year. The investment plan has a straight-line depreciation schedule of 10 years, and the salvage value is Zero. 1.what are the annual net cash flows of the projet ? 2. what are the NPV, IRR and the project, give the investor's required rate of return (rE) is 15% ? 3.if the investor wants to borrow $120 million for the investment, and the interest rate is 5% : (1)what are the reviced annual cash flows? (2)what are the revised NPV, IRR and the discounted payback period?
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