Company B has made an investment of ₤910,393.34 to construct a new bottling plant in England. The variable cost per month is: 9,000. The annual tax depreciation charge (i.e. annual depreciation charge allowable by tax authorities against taxable profits): £28,000. The annual fixed costs of operating the plant are £140,000 and include lease of land. The estimated useful life is 20 years. The bottling plant will have a production capacity of 100,000 bottles per month which will lead to monthly revenues of 50,000. B Ltd think that ample demand exists for the expanded output. In fact, B’s management think that the market for their drinks will expand further in the future. They are currently selling all of the bottled drinks that they produce, and their current plants are operating at full capacity. The discounting rate is 5.7%.
Please help me calculate the NPV for this project.
Do I need to include growth in the answer. If so how do I do it?
Please help me calculate the NPV for this project.
Do I need to include growth in the answer. If so how do I do it?
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