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Your firm is considering an overseas expansion. Below is the information that you have been given regarding the project:
Initial Equipment Cost: $100m.
Life of System: 5 years.
Depreciation method: Straight line Depreciation.
Expected overseas sales: $110m per year.
Raw materials: $75m per year.
Salaries for new workers: $25m per year.
Net Working Capital necessary for plant to operate effectively: $25m (assume that this investment is required at the start of the project and is recovered when the plant shuts down after 5 years.)
Marginal Tax Rate on income and capital gains: 30%
Expected salvage value of equipment after 5 years: $30m.
What will be the cash flows of this project in millions?
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