%u2022 It would cost $500000 today (at t = 0) to construct the new facility. The cost of the facility will be depreciated on a straight-line basis over five
%u2022 If DRC opens the facility it will need to increase its inventory by $100000 at t = 0. $70000 of this inventory will be financed with accounts
%u2022 The Project Manager has estimated that the project will generate the following amount of revenue over the next three years: Year 1 Revenue = $1.0 million
Year 2 Revenue = $1.2 million
Year 3 Revenue = $1.5 million %u2022 Operating costs excluding depreciation equal 70% of revenue.
%u2022 DRC plans to abandon the facility after three years. At t = 3 the project%u2019s estimated salvage value will be $200000. At t = 3 DRC will also
recover the net operating working capital investment that it made at t = 0.
%u2022 The project%u2019s cost of capital is 14%.
%u2022 The DRC%u2019s tax rate is 40%. What is the project%u2019s net present value (NPV)?
What is the project%u2019s modified internal rate of return (MIRR)?