Weekly tasks or assignments (Individual or Group Projects) will be due by Monday and late submissions will be assigned a late penalty in accordance with the late penalty policy found in the syllabus. NOTE: All submission posting times are based on midnight Central Time. Respond to the following scenario with your thoughts, ideas, and comments. Be substantive and clear, and use research to reinforce your ideas. Over lunch, you and Mary meet to discuss next steps with the expansion project. “Do we have everything we need on sales and costs?” you ask. ”It must be time to compute the net present value (NPV) and internal rate of return (IRR) of the Apix expansion project.” “We have the data from James and Luke regarding projected sales and costs, respectively, for the food packaging project,” says Mary. “It is feasible to project that we will receive a tax break from this implementation. I have information from our audit firm that indicates that future depreciation methods for taxes will be straight-line; however, the corporate rates will be reduced to 35% as we assumed in our weighted average cost of capital (WACC) calculation.” “That sounds good,” you say. “Right,” says Mary. “You can use a WACC of 10% for the computation of the NPV and comparison for IRR.” “I’ve got the information I need from Luke and James,” you say. “Does this look right to you? Here’s what they gave me,” you say, as you hand a sheet of paper to Mary. “Let’s look at this now while we’re together,” she says. The information you hand to Mary shows the following: Initial investment outlay of $30 million, consisting of $25 million for equipment and $5 million for net working capital (NWC) (plastic substrate and ink inventory); NWC recoverable in terminal year Project and equipment life: 5 years Sales: $25 million per year for five years Assume gross margin of 60% (exclusive of depreciation) Depreciation: Straight-line for tax purposes Selling, general, and administrative expenses: 10% of sales Tax rate: 35% You continue your conversation. “It looks good,” says Mary. “Use this information from Luke and James to compute the cash flows for the project.” “No problem,” you say. “Then, compute NPV and IRR of the project using the Excel spreadsheet I sent earlier today,” says Mary. “Use the IRR financial function for the computation of IRR.” “Okay,” you say. “I’ll submit my Excel file showing the computation of cash flows, NPV, and IRR by the end of week so you can look at it over the weekend.” “Thanks,” says Mary. Complete the above worksheet for this assignment. U4IP Points Possible 100 Download the Excel Spreadsheet from the Assignment List. Fill in the Cash flow for each year. With the following information: Initial investment outlay of $30 million, consisting of $25 million for equipment and $5 million for net working capital (NWC) (plastic substrate and ink inventory); NWC recoverable in terminal year Project and equipment life: 5 years Sales: $25 million per year for five years Assume gross margin of 60% (exclusive of depreciation) Depreciation: Straight-line for tax purposes Selling, general, and administrative expenses: 10% of sales Tax rate: 35% Use a WACC of 10%. Compute, cash flows. The NPV and IRR of the project will be automatically calculated. If it does not you have made a mistake. Submit the Excel Spreadsheet. U4I: INTELLIPATH Complete your Intellipath by Sunday Intellipath Unit: Investment Valuation and Decision Making Points Possible: 125 Try to complete your Determine Knowledge by Wednesday. If you have problems, flag the question in Intellipath. If you have questions, DO NOT use the Intellipath message system. Email me. Try to include a screen shot of the question. Your path will only consist of learning nodes that you need to work on and is individualized for you, so if you have difficulty with a question you must flag the question in Intellipath. U4IP Hints NWC Recapture is in the fifth year. NWC is given in task list. The discount ra…

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