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what is npv and irr

DCF modeling: A firm is andyzing intivestment opportunity to upgrule mumufacturing in its fictory tis planning horizon is over a 10-years. It has the following components. The livestment: The firm spent $30,000 for a marketing study for evaluating the feasibility of the proyect. Project will eost 510 million. The cutire surn Will be used to buy machingry that will be deprectiated using straight line over the life of the project to a salvage value of $3 milisn. At the end of the projeot, the machinery would be sold for $5 million. After lie project is finished, the firm would keep the land for any future projects. The land was bought 19 years ago for 55 million. The $2 million incretse of initial woth ing capital is ropured, which will be freed up at the end of the project. The improvement As a result of the project, it is expocted that EBI will incrase by 54 million in year 1 and grow. by 10% each year. The company expects to kecp costs flat and increase sales and prices to realize the exmestiol ch.m. Company Datis The company s tar tale is 21% The company's discount rate is 1 What is the NPV in $ ? What is the IRR in \%? DCF modeling: A firm is analyzing an investment opportunity to upgrade manufacturing in its factory. Its planning horizon is over a 10 -years. It has the following components. The Investment: The firm spent $30,000 for a marketing study for evaluating the feasibility of the project. Project will cost $10 million. The entire sum will be used to buy machinery that will be depreciated using straight line over the life of the project to a salvage value of $3 million. At the end of the project, the machinery would be sold for $ million. If the project is not undertaken, the land which is already owned will be sold for $5 million. After the project is finished, the firm would keep the land for any future projects. The land was bought 10 years ago for $5 million. The \$2 million increase of initial working capital is required, which will be freed up at the end of the project. The Improvement: As a result of the project, it is expected that EBIT will increase by $4 million in year 1 and grow by 10% each year. The company expects to keep costs flat and increase sales and prices to realize the expected changes in EBIT. Company Data The company's tax rate is 21% The company's discount rate is 10%