Prairie WindPower Ltd. is a venture that will operate for five years, at which time it will be wound up. $50 million in shares have been sold to the public, and $20 million in five-year bonds have been purchased by the Manitoba Heritage Fund. Capital assets totalling $70 million are being depreciated on a straight-line basis over five years. Capital assets will not be replaced. Working capital will increase by $1 million by the end of the first year, after which it will not change until the venture is wound up. The operating profit before taxes is expected to be $10 million in the first two years and $20 million in the last three years. There is no tax for the first three years and then a 10% tax on operating profit is imposed and paid in the fourth and fifth years. Investors require a return of 8%.
Required:
Use the SVA approach to calculate shareholder value.