Hello,

I have attached the question in a Word document and a blank Excel sheet to work in.

Thank you for your help!

The expected annual free cash flow for a GPS tracker investment is computed as follows: REVENUES $ 1,250,000 Variable Cost Fixed Expenses 750,000 250,000 GROSS PROFIT $ 250,000 Depreciation 100,000 NET OPERATING INCOME $ 150,000 Income Tax 51,000 NOPAT $ 99,000 Plus: Depreciation Less: CAPEX Less: Working Capital Investment 100,000 Free Cash Flow $ 199,000 A. Construct a spreadsheet model to compute free cash flow that relies on the following assumptions or estimates: Base Case Estimates Values Initial Cost of Equipment $ 1,000,000 Project and Equipment Life 10 years Salvage Value of Equipment 0 Working Capital Requirement 0 Depreciation Method Straightline Depreciation Expense $ 100,000 Discount Rate 10 % Tax Rate 34 % Unit Sales 10,000 Price per Unit $ 125 Variable Cost per Unit $ 75 Fixed Costs $ 250,000 B. What level of annual unit sales does it take for the investment to achieve a zero NPV? Use your spreadsheet model to answer this question (Hint: Use the Goal seek function in Excel). C. If unit sales were 15% higher than the base case, what unit price would it take for the investment to achieve a zero NPV?