please complete in Excel!! thank you PROBLEM 1: Australia Inc. Given the...

60.1K

Verified Solution

Question

Finance

please complete in Excel!! thank you image
PROBLEM 1: Australia Inc. Given the following data for a capital budgeting project; Australia Inc. is considering a new three-year project. The project requires an initial investment of $9 million and an additional working capital investment of $3 million (at time "O"). The project is estimated to produce 5 million hats per year each year that can be sold for $6.00/hat. It has variable costs of $3.00/unit each year and fixed cost of $3 million per year. The tax rate is 25% and the discount rate (WACC) is 12%. Use straight line depreciation. The project has no salvage value. Working capital is recovered at the end of the project (a) Calculate the NPV of the project. (b) Generate three possible scenarios and a summary sheet using the "Scenario Manager" in Excel using the following data: Base Case Optimistic Case Pessimistic case Initial Investment $9 million $9 million $9 million Working capital $3 million $3 million #Units sold /Year 5 million 6 million 4 million Price per unit $6 $7 $5 Variable cost/unit $3/unit $2/Unit $4/unit Fixed cost/year $3.0 million $3.0 million $3.0 million Tax rate 25% 25% Discount rate (WACC) 12% 12% $3 million 25% 12%

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students