(Answered) Question - the following information is available about an

Accounting

Question - The following information is available about an investment opportunity. Investments will occur at time 0 and will commence at time 1.

Initial cost-28 million

Unit Sales-400,000

Selling price per unit, this year-$60.00

Variable cost per year, this year-$42.00

Life expectancy-8 years

Salvage value-0

Depreciation-straight line

Tax rate-37%

Nominal discount rate-10%

Real discount rate-10%

Inflation rate-0%

1) Prepare a spreadsheet to estimate the projects annual after tax cash flows.

2) Calculate the investments IRR and NPV.

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