The machines are worth 4,000,000 and will have no value at the project end. It buys a building for manufacturing for 6,000,000 and will sold for the same amount at the end of the project life. The cost of rent of this shop will be 80,000 paid annually. The security cost for the production plant is to be roughly 70,000.

There is a 50% probability that the selling price will be 120, 20% probability that the price will be 110 and 30% probability that the price will be 140. The profit margin will 40% of the selling price.

It has a production capacity of producing 800 units per week. it is expected to have a 50% probability to work at 80% capacity and 50% probability to operate at 100% capacity. The production capacity will increase 6% per year for 5 years.

The project life is 5 years

The company has 10,000,000 cash for new investments

The cost of capital for the new investment will be 9%.

There is a 3% inflation rate throughout.

The staff cost is 240,000 per year.

The cost for security and staff will be paid annually and will increase annually by the rate of inflation

The tax rate is 20% of the profits and half of the tax is paid in the year that it arises and half the year after.

All cash flows will occur at the end of each year except rent and initial investment.