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CIn order to satisfy future growth opportunities. COL has asked Rachel Consulting Limited to conduct some market research. Rachel Consulting is being paid $ 2
CIn order to satisfy future growth opportunities. COL has asked Rachel Consulting Limited to conduct some market research. Rachel Consulting is being paid $m as a fixed fee for her expert consulting services. Project A has an initial outlay of $ million.
Project A will generate additional revenues of $ million starting at the end of year until the end of year It will also incur additional working capital expenses of $ million immediately, this working capital will be recovered at the end of the project. The operating costs will be of the revenues from years to They will be depreciated on a straight line basis over ten years to zero book value. COL has estimated that some assets involved in the upgrades can be sold at the end of year respectively for $ million. The tax rate is All cash flows are annual and are received at the end of the year. The cost of capital for both projects is
calculate the FCFs
calculate the NPV
What is the discounted payback period?
What is the IRR?
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