Calculate the NPV of this project

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Question - The Lucrative Liquidation Co. can purchase two warehouses now, and three more one year from now. Lucrative expects to sell one warehouse per year for the next 5 years. In terms of today dollars, each warehouse costs $500,000 and will sell for $650,000. The tax rate is 35%.

a. Suppose projected inflation is zero and the OCC is 96. Calculate the NPV of this project.

b. Now suppose projected inflation is 4% per year and the OCC is 13%. The warehouse purchased now will be the 1st to be sold. Recalculate the NPV.

Reference no: EM132208091

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