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Solve for npv and irr

Problem: Initial investment outlay of $20 million for equipment only

Project and equipment life: 5 years

Sales projected to be $12 million per for 5 years

Assume gross margin of 50% (exclusive of depreciation)

Depreciation: straight-line for tax purposes

Selling, general and administrative expenses: 10% of sales

Tax rate: 35%

Solve for NPV and IRR.

Now Priced at $20 (50% Discount)

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Determine whether OEC should purchase the filtration system or the precipitation system.