(a) Develop proforma Project Income Statement Using Excel S (b) Compute Net Project Cash flows, NPV, IRR and PayBack Period (c) Develop Problem-Solving and Critical Thinking Skills 1) Life Period of the Equipment-4 2) New equipment cost 3) Equipment ship& install cost 4) Related start up cost 5) Equip. Salvage Value 6) Sales for first year (1) 7) Sales increase per year 000) 8) 0perating cost: (35,000)(60 Percent of Sales) (5,000) 9) Depreclation (Straight Line) YR 15,000 10) Corporate Marginal Tax Rate -60% 200,000 11) Cost of Capital (WACC) ESTIMATING Initial CFO CF1 CF2 CF3 CF4 Year 1 Equipment cost Shipping and Install cost 3) Start up expenses Total Basis Cost (1+2+3 Total Initial Operating Cost EBIT Taxes Net Income Add back Depreciation Total Operating Cash Flow ooxx Terminal: 1) Salvage value (after tax) Salvage Value Belore Tax (1 Total Project Net Cash Flows NPV O#1 Would you accept the project based on NPV, IRR? IRR Payback Would you accept the project based on Payback rule if project cut-off s 3 years? Q#2 How would you explain to your CEO what NPV means? Q#3 What are advantages and disadvantages of using only Payback method? Q#4 what are advanta9es and disadvantages of using NPV versus IRR? Q#5 Explain the difference between independent projects and mutually exclusive projects. When you are confronted with Mutually Exclusive Projects and have coflicts with NPV and IRR results, which criterion would you use (NPV or IRR) and