Question: quickly please ... help me You have been asked to estimate the NPV and IRR of an investment in a new 3-year venture for a

quickly please ... help me

You have been asked to estimate the NPV and IRR of an investment in a new 3-year venture for a telecom firm.

a. The initial investment is expected to be $2 billion and will be depreciated straight line over three years to a salvage value of $200 million at the end of the third year.

b. During the three years, working capital is expected to be 15% of revenues and the investment has to be made at the start of each year; it can be fully salvaged at the end of the project.

c. The cost of capital for the investment is 9% and the tax rate is 35%.

d. The project is expected to have the following revenues and EBITDA (earnings before interest, tax, depreciation and amortization) for the next 3 years (in millions of dollars)

Year

1

2

3

Revenues

$2,000

3,000

4,000

EBITDA

300

400

600

Estimate the NPV and IRR for this project.

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