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Endy Mattresses Inc. (EMI). is building a factory that can manufacture 10,000 high-end mattresses per year for 5 years. The factory will cost $10,000,000. In

Endy Mattresses Inc. (EMI). is building a factory that can manufacture 10,000 high-end mattresses per year for 5 years. The factory will cost $10,000,000. In year 1 EMI will sell mattresses for $1,020 each in nominal terms. The price will rise at 3% per year in real terms. During the first year, variable cost will be $408 per mattress in nominal terms and will rise by 2% per year in real terms. EMI will depreciate the factory at a CCA rate of 20%. EMI will sell the factory for $2,208,162 in nominal terms (or $2,000,000 in real terms) at the end of year 5. The nominal discount rate is 15%. The rate of inflation is 2%. Cash flows except the initial investment occur at the end of the year. The corporate tax rate is 40%. Asset Pool will close after 5 years. Any gain/loss on the disposal of the factory will be taxable/tax deductible. What is the NPV of this project?

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