Based on the inputs below prepare a capital budget analysis for this Base Case using the Net Present Value, Internal Rate of Return, Profitability Index and Payback in Years determining whether the project is feasible. Please show your spreadsheet calculations and your final determinations of go or no go on the project. All you work should be in a spreadsheet file.

In addition to your base case analysis, please provide a scenario analysis based on the following:

Worst Case Scenario = 20% decrease in sales units sold per year: 25% Probability

Base Case Scenario = 50,000 units sold per year: 55% Probability

Best Case Scenario = 20% increase in sales units sold per year: 20% Probability

Project Inputs:

WACC the cost of capital (hurdle rate) will be the current yield of the 10 Year U.S. Treasury Note as of Friday July 20, 2018, plus 700 basis points.

Project Investment Outlay, Year 0 - $400,000

Project Investment Life 10 years

Project Depreciation - $40,000 / year

Project Salvage Value - $10,000

Working Capital Base of Annual Sales 10%

Expected inflation rate per year, Selling Price Per Unit 2.0%

Expected inflation rate per year, Manufacturing Cost per unit 2.5%

Expected inflation rate per year, Fixed operating costs per year 2.0%

Project Tax Rate 22%

Inputs continued:

Units sold per year 50,000

Selling Price per Unit, Year 1 - $35

Fixed operating costs per year excluding depreciation - $150,000

Manufacturing costs per unit, Year 1 - $25.20

How does this risk analysis effect Net Present Value and Internal Rate of Return analysis? Please show the calculations.