Complete the Excel Spreadsheet. (Complete cells with numbers from your problems (i.e. actually type in the numbers). In the non-highlighted cells, you are to use formulas (for example: =B9, =C10-C9, =SUM(), =C16-C17-C18, etc.). Part A. (Project A) Modern Machine, Inc., is considering a new 5-year project that requires an initial fixed asset investment of 654 million. The fixed asset will be depreciated using MACRS for its 5-year life, after which it can be sold for 300 million. The project is estimated to generate 990 million in annual sales, with costs of 90 million, each year. The tax rate is 34 percent, and the WACC is 10 percent. The project requires an initial investment in net working capital at initiation of the project of $15 million, with additional increases of $5 million at years 2 &3 (this total investment of NWC returns to the firm at the completion of the project, year 5). In addition to the purchase of the machine and change in net working capital, management has determined that the new machine will require an opportunity cost of $150 million at initiation (this will also be a cash inflow at the end of the project). (Use this information to complete Part A)

**Cells saying number should have numbers, the rest of the cells should have formulas**
Cash Flow of Cap. Budg.	Project A
Year	0	1	2	3	4	5
Cost of New Machine	Number
Book Value of Machine
Opportunity Cost	Number
Net Working Capital Balance	Number	Number	Number	Number	Number
Change in NWC
Salvage Value of Machine						Number
Tax on Sale of Machine
Cap. Ex. & NWC
Add'l Sales Revenue		Number
Add'l Operating Costs		Number
Depreciation
EBIT
Tax (34%)
Net Income
Cash Flow from Operations (OCF)
Cap. Ex. & NWC
Total Incremental CF of Project
What is the NPV and IRR of this project?
Discount Rate	Number
NPV
IRR

Part B. Modern Machine has the alternative of investing in a 3-year machine that costs 540 million, requires the same opportunity cost, a 10 million increase in NWC at initiation and a 5 million investment at time 2. This machine will increase sales by 200 million and costs by 180 million, each year.

Cash Flow of Cap. Budg.	Project B
Year	0	1	2	3
Cost of New Machine	Number
Accum. Depreciation
Book Value of Machine
Opportunity Cost	Number
Net Working Capital Balance	Number	Number	Number
Change in NWC
Salvage Value of Machine				Number
Tax on Sale of Machine
Cap. Ex. & NWC
Add'l Sales Revenue		Number
Add'l Operating Costs		Number
Depreciation
EBIT
Tax (34%)
Net Income
Cash Flow from Operations (OCF)
Cap. Ex. & NWC
Total Incremental CF of Project
What is the NPV and IRR of this project?
Discount Rate	Number
NPV
IRR

Use this Marcs Chart for the problems

Marcs
3 Year Life		33.30%	44.40%	14.80%	7.50%
5 Year Life		20.00%	32.00%	19.20%	11.50%	11.50%	5.80%
7 Year Life		14.30%	24.50%	17.50%	12.50%	8.90%	8.90%	8.90%	4.50%
10 Year life		10.00%	18.00%	14.40%	11.50%	9.20%	7.40%	6.60%	6.60%	6.60%	6.60%	3.10%