A Project for moving distribution operations from our current warehouse to a new state of the art distribution center is under consideration.

Direct investment cost for this Project is expected to be $750,000

The project is expected to increase our customer service level, this will eventually lead to more customers and market share.

It is expected that the first year of operation of the new distribution center (assume it would be completed at year-end) well increase income by $50,000, and the next 9 years it will increase by 2% every year. It is expected that by year 10, the new distribution warehouse will have a salvage value of $350,000.

The old warehouse can be sold on $200,000.

Operating cost for the new distribution center would be $400,000 per year, while the old warehouses is $350,000.

Companys MARR for this Project is 20% per year.

Assuming results from the previous problem:

1. Find NPW and IRR (30 points)
2. Create a chart to show projects sesitivity to different MARR values (10 points)
3. Find payback period (10 points)