Initial investment is $5m, and the project will deliver $650 k of free cash per year for 20 years (This is based on assumption that sales of $3,000,000 cost $850,000 to deliver).

If you can borrow money from the bank at 20% calculate NPV for 20 years and show all the calculations. Write all the assumptions as well.

If all customers prepay $850,000 for year 1 only, does this change your decision (interest rate 20%)?

What would be Internal rate of return if there is no prepayment?

Find payback on the project as well.