Calculate the NPV and IRR for this project and decide if it should be undertaken.

Initial investment is 200 million

The project is expected to last 5 years. The salvage value of the plant is expected to be 50 million

Prices, Demand, and Variable costs:

Year Price Demand (units) VC/unit

1 300 600,000 180

2 310 700,000 190

3 320 800,000 200

4 320 800,000 210

5 300 500,000 210

Fixed costs are expected to be 20 million / year

company expects the NWC requirements as follows:

Initial NWC Investment of 50 million

Annual NWC Requirements = 0 million

Depreciation expense is 10 year, straight line

The Required Rate of return on this project is 15%