Question
You are considering a project which is projected to have revenues in the next five years of $3, $4, $5, $5, and $2 (million). Variable
You are considering a project which is projected to have revenues in the next five years of $3, $4, $5, $5, and $2 (million). Variable costs are assumed to be 50% of revenue and fixed costs are$1.4 million per year. The firm's WACC is 7%. The initial outlay for purchase and installation of equipment is $6 million with an additional $1 million in new working capital. The machine is in the MACRS 5 - year class, charging 20%, 32%, 19%, 12%, 11%, and 6% in years one to six. If the machine will sell after year five for$2 million and the firm's tax rate is 39% what is the NPV of the project? All figures are given in millions of dollars, answer in millions of dollars e.g. 1.5867
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