Suppose we believe the cash revenues from our fertilizer business will be $20,000 per year, assuming everything goes as expected. Cash costs (including taxes) will be $14,000 per year. We will wind up the business in eight years. The plant, property, and equipment will be worth $2,000 as salvage at that time. The project costs $30,000 to launch. We use a 15 percent discount rate.

REQUIRED:

Estimate the NPV of Project. Should we accept the project?

Answer rating: 100% (QA)

To calculate the net present value NPV of the fertilizer business project we need to discount the ex... View the full answer