Question:
1. Initial investment outlay of $30 million, consisting of $25 million for equipment and $5 million for net working capital (NWC) (plastic substrate and ink inventory); NWC recoverable in terminal year.
2. Project and equipment life: 5 years
3. Sales: $25 million per year for five years
4. Assume gross margin of 60% (exclusive of depreciation)
Depreciation: Straight-line for tax purposes
5. Selling, general, and administrative expenses: 10% of sales
6. Tax rate: 35%
7. compute cash flows,
8. NPV,
9. and IRR