You will complete a capital budgeting Excel spreadsheet solution based on:
- Cost of new equipment $14,800,000
- Shipping and installation 200,000
- Unit sales
- Year 1 70,000
- Year 2 120,000
- Year 3 120,000
- Year 4 80,000
- Year 5 70,000
- Sales price = $300 / unit in years 1-4 and $250/unit in year 5
- Variable cost = $140 / unit
- Fixed cost = $700,000 per year for all 5 years
- Working capital : $200,000 at start of project, recovered at end
- Depreciation = straight line over 5 years
- Tax rate = 34%
- Cost of capital = 15%
You must complete this project using an Excel spreadsheet. Your assignment specifically:
- Lay out the cash flows for years 1-5
- Calculate the project NPV, using the Excel NPV function (write the function on your submitted spreadsheet)
- Calculate the project IRR, using the Excel NPV function (write the function on your submitted spreadsheet)
