what is the NPV and IRR of this project? Please show work
ATLANTIDA The supermarket chain Atlantida is considering an investment in a new delivery service for telephonic orders. The project will have a lifetime of 5 yedrs The initial investment in distribution fleet, telephonic equipment, delivery packages and other fixed assets is approximately 70,000. These assets will be depreciated over a 5-year period, using a straight- line depreciation. At the end of this project, the distribution fleet and telephonic equipment can be sold for 6,000. The company already has the available warehouse capacity needed for this service. The service will occupy 10% of the warehouse. The warehouse is rented at an annual cost of 30,000. The wages for the project workers will be 15,000 per year, 20% of them are workers transferred from other Atlantida businesses (the company has a lifetime job policy). The distribution costs (fuel, etc.) are i% of sales of the new service. In the first year, Atlantida expects to sell 10% of the current quantity sold in the supermarkets. For the following years, this percentage will increase to 30% However, as a consequence of the introduction of the new service, it is expected that sales of the supermarket business will go down Sales in the traditional supermarket business are expected to decrease from 1.5 million a year to 1.4 million a year for the next five years. This is a premium service. Therefore, the prices of the home delivery goods will be 5% higher than the current supermarket prices. The cost of goods sold represents 80% of the supermarket sales price. Atlantida expects to spend 10,000 now in advertising and 20,000 during the first year of the project. Accounts are payable in 15 days and the inventory corresponds to one month of sales. Accounts are receivable in 30 days for home delivery and cash payment for supermarket clients. Atlantida pays taxes of 40% and has profits of 100,000 in its current business ATLANTIDA The supermarket chain Atlantida is considering an investment in a new delivery service for telephonic orders. The project will have a lifetime of 5 yedrs The initial investment in distribution fleet, telephonic equipment, delivery packages and other fixed assets is approximately 70,000. These assets will be depreciated over a 5-year period, using a straight- line depreciation. At the end of this project, the distribution fleet and telephonic equipment can be sold for 6,000. The company already has the available warehouse capacity needed for this service. The service will occupy 10% of the warehouse. The warehouse is rented at an annual cost of 30,000. The wages for the project workers will be 15,000 per year, 20% of them are workers transferred from other Atlantida businesses (the company has a lifetime job policy). The distribution costs (fuel, etc.) are i% of sales of the new service. In the first year, Atlantida expects to sell 10% of the current quantity sold in the supermarkets. For the following years, this percentage will increase to 30% However, as a consequence of the introduction of the new service, it is expected that sales of the supermarket business will go down Sales in the traditional supermarket business are expected to decrease from 1.5 million a year to 1.4 million a year for the next five years. This is a premium service. Therefore, the prices of the home delivery goods will be 5% higher than the current supermarket prices. The cost of goods sold represents 80% of the supermarket sales price. Atlantida expects to spend 10,000 now in advertising and 20,000 during the first year of the project. Accounts are payable in 15 days and the inventory corresponds to one month of sales. Accounts are receivable in 30 days for home delivery and cash payment for supermarket clients. Atlantida pays taxes of 40% and has profits of 100,000 in its current business
