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6. SQUARE Group is evaluating the proposal of a new RMG factory called SQUARE Exclusive Fabrics. SQUARE Group is renting a premise of 50,000 Square feet in Savar, and SQUARE Exclusive Fabrics is planning to use 10,000 square feet from this facility. The rest of the premise is currently being used by another RMG factory of SQUARE Group called SQUARE Fabrics. The SQUARE Fabrics has already started its production Square Group has asked you to calculate the NPV of its proposed SQUARE Exclusive Fabrics. Already the Group has taken significant debt, and the therefore the group is carefully evaluating this business opportunity. The monthly salary expense for this business will be USD 9500, whereas annual utility and other expenses will be USD 30,000. The cyclical nature of the business, the uncertainty of raw material prices, technology, environment, and slow pace of liberalization can affect this business. Therefore, Square has decided to use 25 percent as the discount rate for this business. The cash flow from this project is provided below. Should they open this new business? Show detailed calculation. 4 Year 0 Year 1 Year 2 Year 3 Year 4 -3800,000 1789,732 2183,082 2153,332 4177,352 6. SQUARE Group is evaluating the proposal of a new RMG factory called SQUARE Exclusive Fabrics. SQUARE Group is renting a premise of 50,000 Square feet in Savar, and SQUARE Exclusive Fabrics is planning to use 10,000 square feet from this facility. The rest of the premise is currently being used by another RMG factory of SQUARE Group called SQUARE Fabrics. The SQUARE Fabrics has already started its production Square Group has asked you to calculate the NPV of its proposed SQUARE Exclusive Fabrics. Already the Group has taken significant debt, and the therefore the group is carefully evaluating this business opportunity. The monthly salary expense for this business will be USD 9500, whereas annual utility and other expenses will be USD 30,000. The cyclical nature of the business, the uncertainty of raw material prices, technology, environment, and slow pace of liberalization can affect this business. Therefore, Square has decided to use 25 percent as the discount rate for this business. The cash flow from this project is provided below. Should they open this new business? Show detailed calculation. 4 Year 0 Year 1 Year 2 Year 3 Year 4 -3800,000 1789,732 2183,082 2153,332 4177,352

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