Your Company is looking at setting up a manufacturing plant overseas to manufacture driverless flying cars. The company bought some land in that country three years ago for $2.7 million. The land was just appraised for $3.8 million after tax. The proposed project will last five years. It is expected that you can sell the land at the end of 5 years for $4.1 million.

The manufacturing plant will cost $34 million to build and will be straight line depreciated over the life of the project of 5 years. At the end of 5 years, it will cost you $1 million dollars to dispose of the plant and restore the land to a useable state as required by law (hint: this is a negative salvage value). The company will incur $6.9 million in annual fixed costs. The plan is to manufacture 121 driverless flying cars per year and sell them for $1,145,000 each; the variable costs are $900,000 per unit. The project also requires $1.5 million in initial net working capital. WACC is 10%.

Calculate NPV and determine if you will do the project or not.