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Your company is considering a project with a total depreciable capital of $180 million including costs for offsite utilities. It is to be installed over
Your company is considering a project with a total depreciable capital of $180 million including costs for offsite utilities. It is to be installed over a 2-year period (2022-2023). Just prior to start-up, $35 million of working capital is required. At full production capacity, sales revenues are projected to be $200 million/yr. and the total annual product cost, excluding depreciation, is projected to be $90 million/yr. The plant is projected to operate at 50% and 75% of full of capacity during the first and second operating years with the corresponding revenues and costs. Assume a linear depreciation for 10 years. Taxes and inflation are estimated at 20% and 2%, respectively. Calculate over an estimated operating period of 20 years: a) The NPV for an interest rate of 10% compounded annually. Your company is considering a project with a total depreciable capital of $180 million including costs for offsite utilities. It is to be installed over a 2-year period (2022-2023). Just prior to start-up, $35 million of working capital is required. At full production capacity, sales revenues are projected to be $200 million/yr. and the total annual product cost, excluding depreciation, is projected to be $90 million/yr. The plant is projected to operate at 50% and 75% of full of capacity during the first and second operating years with the corresponding revenues and costs. Assume a linear depreciation for 10 years. Taxes and inflation are estimated at 20% and 2%, respectively. Calculate over an estimated operating period of 20 years: a) The NPV for an interest rate of 10% compounded annually
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