HI.

This is an NPV and IRR question.

Here are the facts.

Year Unit Sales

1 73,000

2 86,000

3 105,000

4 97,000

5 66,000

Project requires $ 1,500,000 in net capital to start, additional working capital investment each year equal to 15% of the project increase in sales for the following year.

All NWC investment is recovered at end of project. Total fixed costs are $ 3,200,000 per year, variable production costs are $ 255 per unit, unit price each is $ 385, Equipment cost is $ 16,500,000 under the seven year MACRS, in five years this equipment can be sold for 20% of original cost. Tax rate is 21%, required return hurdle is 18%.

What is the NPV and the IRR of this project?

Thanks!