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Shoppers Drug Mart is considering launching a new line of natural skincare products. The project has the following parameters: Product life cycle of 8 years.
Shoppers Drug Mart is considering launching a new line of natural skincare products. The project has the following parameters:
- Product life cycle of 8 years.
- Initial capital expenditure requirement of $57 million.
- An increase in net working capital of $1.0 million in year 1, which will be recovered at the end of year 8.
- Shoppers Drug Mart's marginal tax rate is 35%.
- Shoppers Drug Mart's cost of capital is 9% effective annual
- At the end of year 8, Amazon expect to salvage all project assets at $6.6 million.
What is the net impact on NPV of the change in net working capital?
Indicate your answer in millions and round to two decimal places. Do not put $ in your response, if it is a loss, make the answer negative.
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