You are the appointed financial manager of International Mulch and Compost Company (IM&C) You need to analyze a proposal for marketing guano as a garden fertilizer The project requires an investment of $12 million in plant and machinery The plant and machinery is depreciated over 6 years and we will use straight line depreciation In year 7, the machinery can be dismantled and sold for net proceeds estimated as $1.949 million. This is the forecasted salvage value. The estimates of revenues, cost of goods sold, other current expenses are provided The tax rate is 21% and the cost of capital is 20% Calculate the NPV. Should you invest in this project?

Cash Flows in thousands Period 4 0 1 5 12.000 -12,000 1-29 409 1,540 0 901 4.000 1 Capital Investment 2 Investment in Fored Assets 3 Sale of Fixed Assets 4 Less tax on sale 5 Cash flow from Investment Capital 6 7 Operating Cash Flow 8 Revenues 9 Cost of Goods Sold 10 Other Costs 11 Depreciation 12 Pretax Profit (lines 8-9-10-111 13 Tax rate-21%) Cine 120.21) 14 Profit after tax (line 12-13) 15 Operating Cash Flow (lines 8-9-10-13) 16 17 Investment in Working Capital 18 Working Capital 19 Change in Working Capital 20 Cash flow from Investment in Working Capital (Line-19) 21 22 Project Valuation 23 Total Project Cash Flow (lines 5+15+20) 34 NPV Calculations Sheet 523 837 2200 2.000 4514 947.94 3.566 OG 1.566 06 4,000 840.00 3.160.00 3.160.00 12887 7.729 1,210 2.000 1.943 400 1.538.92 3,538.92 32.610 19352 1,331 2.000 9722 2012.67 7.6843) 9.68433 1464 2.000 16.092 33292 12,212.68 14712.68 35,834 21.492 1611 2.000 10731 225151 8.477.49 10.47749 19717 11.30 2772 2.000 4115 8615 3.250 RS 525085 2.003 0 550 550 -550 1.289 739 3.263 1.972 -1972 4890 1.639 -1629 3. 110 1803 2002 3581 2003 15,16000 -2,116.00 2.799.92 7,712 33 15.08368 11.784 49 Gits 3.54.71 > W 30 888 14 15