$1.$ Projecting cash flows. Complete the cash flow projections for project #$2.$ Assume the following:

$$ The project has a $10-$year life.

$$ Revenues are $$70,000$ in year $1$ and increase $$5,000$ per year thereafter.

$$ Operating expenses are $70\%$ of revenues in each year.

$$ Initial equipment purchases are $$100,000,$ depreciated on a $7-$year MACRS schedule.

$$ Equipment purchased will have a resale value of $$30,000$ at the end of the project.

$$ The tax rate is expected to be $35\%$ over the life of the project.

$$ The discount rate for the project is $11\mathrm{.}5\%$

$$ Net working capital of $$25,000$ will need to be maintained over the life of the project.

$2.$ Finding the NPV$.$ Use the NPV function to find the NPV of the project.

Q$3$: Under the above assumptions, what is the NPV of this project? $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$3.$ Finding the IRR. Use the IRR function to find the IRR for the project. $($enter on line $31,$ below the NPV$).$

Q$4$: What is the IRR under the above assumptions? $\_\_\_\_\_\_\_\_\_\_\_\_$

$4.$ Sensitivity analysis. Note on the spreadsheet that all green cells are assumptions you can modify. The best way to complete sensitivity analysis is by using one$-$way tables $($after highlighting the relevant cells go to Data, What If Analyis and then Data Tables$).$ Complete sensitivity analysis for various levels of CAPEX, Year $1$ sales, Resale value of initial equipment purchase $($RV$),$ and the discount rate $($WACC$).$ The structure of the tables has been set up for you.

Use the data tables to determine the NPV under each of the following individual assumption changes.

Q$5$: Initial equipment purchases $($CAPEX$)$ are $$110,000\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Q$6$: Year $1$ Sales $($Yr $1$ Sales$)1$ are only $$60,000,$ but still rise by $$5,000$ thereafter $\_\_\_\_\_\_\_\_\_\_\_$

Q$7$: The equipment has no resale value RV $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Q$8$: The discount rate is $10\%\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$5.$ Creating a two$-$dimensional data table. Do some additional sensitivity analysis by creating a two$-$dimensional data table. Create a Data Table showing what the NPV would be with discount rates of $8\%,10\%,12\%,14\%,$ and $16\%$ and with initial CAPX of $$80,000,$ $$90,000,$ $$100,000,$ $$110,000,$ and $$120,000($the structure has been set up for you$).$ Highlight the table G$48$:L$53,$ click on data, then what if analysis, then data table. The row input cell is input cell for the Cost of Capital, and the column input cell is the input cell for CAPX. Click on OK and you will have a table showing the NPV under different combinations of assumptions.

Q$9$: According to your table, what would the NPV be if the discount rate were $14\%$ and initial CAPX were $$110,000?\_\_\_\_\_\_\_\_\_\_\_\_$