Question: Company ABC is looking at doing the below project which is expected to have the below 1st year financials, Net working capital is paid at

Company ABC is looking at doing the below project which is expected to have the below 1st year financials, Net working capital is paid at time zero.

Revenue: $58M
EBITDA: $14M
Depreciation: $2.5M
CAPEX: $2M
Net working capital: $7M
Tax Rate: 30%

It is expected that over 10 years the EBITDA margin will increase by 0.4% a year while depreciation, CAPEX, and Net working capital will remain a constant % of sales, Revenue will grow by 3% a year.

After 10 years of business the project will be finished and Net Working Capital returned.

If your require rate of return is 11% at what initial cost would you accept the project?

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