The initial investment in working capital is €6,000 and this is expected to increase by €500 after 1 year and after 2 years.
The firm’s corporate tax rate is 20%. Calculate the Investment Cashflows, Operating Cashflows and Working Capital Cashflows for this investment proposal.
If the correct discount rate is 15%, calculate the NPV of this investment for the firm and comment on whether and why the firm should undertake this investment or not.