Question: pls explain like its a written exam Question 6.7 (10pts) An industrial company is planning to expand one of its manufacturing facilities. At n =
pls explain like its a written exam

Question 6.7 (10pts) An industrial company is planning to expand one of its manufacturing facilities. At n = 0, a piece of property costing $1.5 million must be purchased to build a plant, and an additional $4 million is required for construction work. At the end of the first year, the company needs to spend about $6 million on equipment and other start-up costs. Once the building becomes operational, it will generate revenue in the amount of $8 million during the first operating year (at n = 2). This will increase at the annual rate of 5% over the previous year's revenue for the following ten years (including n = 12). Afterwards, the sales revenue will stay constant. The project will remain operational for 15 years in total (until n = 16). The expected salvage value of the land at the end of the project's life would be about $3 million, the building about $1 million, and the equipment about $600,000. The annual operating and maintenance costs are estimated to be approximately 45% of the sales revenue each year. What is the IRR for this investment? If the company's MARR is 30%, determine whether the investment is a good one. (Assume that all figures represent the effect of the income tax.) (If you use a computational tool such as Excel please make sure that your reasoning is clearly stated on your solution file) A) 26.82% the project is not economically attractive B) 39.05% the project is economically attractive C) 43.15% the project is economically attractive D) Answers A, B and C are not correct
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