con't

Under the new assumptions, the NPV is closest to:

a) 165 million

b) 170 million

c) 175 million

d) 180 million

Please explain why the answer is 165million, thanks!

Use the information and table below answer question 5. Electric Cars Inc is evaluating a proposal to build a new plant to manufacture a 2-seat electric car, which has the following incomplete incremental free cash flow projections in millions of dollars. Assume cost of capital is 12%, relevant CCA rate is 10%, and assets are never sold. Year 0 Revenues - Manufacturing expense - Marketing expenses - CCA = EBIT Taxes (35%) = Unlevered net income + CCA - Increases in NWC - Capital Expenditures + Continuation value = FCF Years 1-9 100 (35) (10) ? ? ? ? ? Year 10 100 (35) (10) ? ? ? ? ? (5) (150) 12 ? (150) ? 5) Rather than assume that cash flows for this project are constant, management would like to explore the sensitivity of its analysis to possible growth in revenues and operating expenses. Specifically, management would like to assume revenues are as given in the table for year 1 and grow by 12% per year every year starting in year 2. As well, assume manufacturing and marketing expenses are as given in the table for year 1 and grow by 12% per year every year starting in year 2. Finally, assume initial capital expenditures, CCA, additions to working capital, and continuation value remain as initially specified in the table. Under the new