Consider a new project for a chemical plant. The project involves a capital investment (land not included) of US$200M. It is estimated that the recovery value of the equipment at the end of its useful life is 10%. The useful life of the equipment to estimate its depreciation is 7 years. The plant will come into operation 2 years after construction begins. Estimated manufacturing costs for this project, not considering equipment depreciation, are $45M per year, while estimated sales are $125M per year. Taxes for this project can be considered 30% on profits before taxes. Considering a 10-year scenario for the evaluation of the project, it is requested:

1. Using straight-line depreciation over the life of the equipment, prepare the income statement for the entire project (10 years). Inflation can be assumed to be zero over the lifetime of the project.

2. What is the internal rate of return for this project? What is the net present value for the project? How long is the investment payback period of the project? What is your opinion on the economic viability of the project? What risks or imponderables do you identify in this analysis?