Question: Should the coffee packaging project be accepted? Why or why not? Compute the projects IRR and NVP. Initial investment outlay of $40 million, consisting of

Should the coffee packaging project be accepted? Why or why not? Compute the projects IRR and NVP.

Initial investment outlay of $40 million, consisting of $35 million for equipment and $5 million for net working capital; NWC recoverable in the terminal year

Project and equipment life: 5 years

Sales: $27 Million per year for 5 years

Assume gross margin of 50% (exclusive of depreciation)

Deprecation: Straight-line for tax purposes

Selling, general, and administration expenses: 10% of sales

Tax rate: 35%

Assume a WACC of 10%

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