Consider the following project being evaluated by your company:
-Intial cost of asset 100000 will require 15000 transportation and installation cost
-Will be depreciated S/L over 4 years to a 20000 salvage
-Market value for the asset at end of 5 years is expected to be 10000
-Net Investment in NWC in year 0 ( at intial period) of 30000
-Projects economic life 5 years
-Incremental sales first year. expected to be generated by the project 150000
-Annual cost of goods sold 40% of sales
-Sales growth 3%
-Marginal tax rate 34%
-Cost of Capital 10%
1) Calculate the project cash outflow in year 0 ( initial outlay)
2) Calculate annual operating cashflows for years 1-5 ((OCF))
3) Calculate the projects terminal cashflow for year 5 (TCF)
4) Calculate the projects NPV IRR
5) Using excel data table perform a sensitivity analysis of annual sales on NPV for the project ( start with sales of 120000 incrementing it by 10000 to
180000)