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The firm says it can capture 5% of the whole market Table 1 is the data of the consumer arker table 2 is the the

The firm says it can capture 5% of the whole market Table 1 is the data of the consumer arker table 2 is the the firms investment project

Table 1: Consumer electronics market (numbers in millions)

Annual sales revenues

100,000

Annual costs (variable)

50,000

Annual growth in sales/costs

3%

Beta of sales and cost cash flows

1.5

Table 2 sets out data on De Facto Cos investment project.

Table 2: De Facto Cos investment project

Investment cost in year 0

5.9bn

Annual fixed costs

1bn

Annual sales revenues

4.5% of total market

Annual variable cost

4% of total market

Working capital

20% of next years sales

Duration

10 years

b)What is the present value of De Facto Cos future sales revenues?

c)What is the present value of De Facto Cos future variable and fixed costs?

d What is the net present value of De Facto Cos working capital investment?

e) What is the net present value of De Facto Cos total investment in the consumer electronics market?

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