A Firm Decides to Invest $5 Million in a New

Multiple Choice

A firm decides to invest $5 million in a new food processing plant. The plant has an expected life of 20 years with expected sales of 6 million cans of food per year. Fixed annual costs are $2 million and annual variable costs are $1 per can. The product will be priced at $2 per can. Corporate tax rate is 40%, and the MARR is 10%. Ignoring tax impacts on the first cost, what is the project's PW under the base case scenario?

A) $25.6 million
B) $15.4 million
C) $46.1 million
D) $20.4 million
E) $29.0 million