Question: For spread sheet picture, can you please help me with filling in the green shaded areas, thank you :) G E C B A Montag

G E C B A Montag Metals Exercise 1 Years 2 C 3 Initial Investment 4 New Equipment 5 Net Working Capital Investment 6 Initial Investment 5 Operating Cash Flows Over the Project Life Revenues 8 9 10 Costs 11 Depreciation Expense (3 year MACRS) 12 EBIT 13 -Taxes@ 21% 14 Operating Income after Tax 15 +Depreciation Expense 16 OCF 17 18 19 Terminal Cash Flow 20 Salvage Value 21 Tax 21% 5 22 Salvage Value after Tax 23 24 Net Working Capital Return 25 Terminal Cash Flow 26 27 28 NPV Analysis 29 Project Cash Flows 5 30 31 Discount rate @12 % 32 Net Present Value (-sum of present values) 0.12 33 Internal Rate of Return 34 35 36 Cumulative Project Cash Flows 37 Payback Period 38 39 40 41 FN312_Mini Case: Chapters 9&10 STAMPING MACHINE PURCHASE RECOMMENDATION The CFO of Montag Metals is considering the purchase of a new stamping machine to support its sales growth. The firm has hired you to determine whether it will be a good idea to pursue this project. The new machine will allow the firm to increase annual revenues by $3,500,000. Annual cash costs will increase by $2,000,000. In addition, the firm will need to immediately increase inventory by $500,000. Accounts payable will partly offset this, increasing by $350,000. The new stamping machine costs $4,500,000 installed. It will be depreciated by MACRS method for 3-year property. The expected economic life of the machine is five years. At the end of five years the machine will likely be sold for about 20% of its initial cost. The firm's tax rate is 21%. The CFO also asks you to prepare a report recommending whether the firm should go forward with the investment or not. In preparing your recommendation, you should create a spreadsheet (use template provided) to carefully detail the following calculations: The initial investment in the project. (3 points) The operating cash flows over the project life. (12 points) The (non-operating) terminal cash flow for this project. (6 points) The project's internal rate of return (IRR) and its net present value (NPV) at the firm's cqst of capital of 12%. Also, calculate the payback period. (8 points) Based on NPV and IRR, what would be your recommendation (4 points) a) b) e)
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