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Fresh off the excitement of the 2 0 1 2 London Olympic Games, you decide that you want your firm to take advantage of the
Fresh off the excitement of the London Olympic Games, you decide that you want your firm to take advantage of the profits to be made for the games in Rio de Jeneiro. To do so you plan to open a factory in Brazil. After examining the idea, your CFO projects revenues next year to be $ million and costs to be $ million. Both of these are expected to grow at a rate of per year as the excitement for the games builds. Your firm faces a tax rate, a discount rate and you can depreciate your new investment using the straight line method over the four years leading up to the games, at which point the value of the venture moving forward will be $ million. This $ million is the aftertax terminal value that is in year that is dollars and is the PV of all cash flows year and beyond. The capital expenditure of this project is $ million. What is the NPV of the project?
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