In this paper, please discuss the following case study. it must include the following :

• Explain your approach to the problem.
• Support your approach with references, and execute your approach.
• Provide an answer to the case study's questions with a recommendation.

This case continues following the new project of the WePROMOTE Company, that you and your partner own. WePROMOTE is in the promotional materials business (see the Ref below). The project being considered is to manufacture a very unique case for smartphones. The case is very durable, attractive and fits virtually all models of smartphone. It will also have the logo of your client, a prominent, local company and is planned to be given away at public relations events by your client.

As we know from the prior case involving this company, more details of the project become apparent and with more precision and certainty.

The following are the final values to the data:

The cost of the equipment will be $70,000 and this cost is incurred prior to any cash is received by the project.

The expected annual cash revenue of the project will be $30,000.

The expected annual cash outflows (expenses/costs) are estimated at being $11,000, excluding depreciation.

Your tax rate is 30% and you plan to depreciate the equipment on a straight-line basis for the life of the equipment. The discount rate you are assuming is 6%.

After 5 years the equipment will stop working and there will be no salvage value.

Requirements of the paper:

Perform the final NPV calculations and provide a narrative on how you calculated the computations and why (justification of answer).

Present your calculated answers in schedule format (a table) along with your narrative. Microsoft Excel is also recommended for calculating and creating a table (your schedule).

Then provide a summary conclusion on whether you should continue to pursue this business opportunity.

Research, using at least one other source other than the textbook materials that support your calculations and conclusions.

Papers will be assessed on the following criteria:

Provide the final, accurate NPV calculations.

A narrative on how the NPVs were calculated. The narrative should include how the data relating to depreciation and its tax consequences affect the cash flow of the project. Include a table with your analysis to present your work.

Provide a conclusion on whether this business opportunity should be pursued.

Ref:

BUS5111: TA #2 Solution Investment: 80,000 Cash inflows 14,000 for 7 years 5,000 at year #7 Discount rate is 7% Partner : Year 2 3 4 5 6 7 7 TOTALS Project Discount Rate 0. 07 Equipment purchase price ($80, 000) Cash inflow from new equipment $14, 000 $14, 000 $14, 000 $14, 000 $14, 000 $14, 000 $14, 000 Salvage value $5, 000 Total cash in (out) $14, 000 $14, 000 $14, 000 $14, 000 $14, 000 $14, 000 $14, 000 $5, 000 Discount Factor (7%) 0. 9346 0. 8734 0. 8163 0. 7629 0. 7130 0. 6663 0. 6227 0. 6227 Present Value $13, 084 $12, 228 $11, 428 $10, 681 $9, 982 $9, 329 $8, 718 $3, 114 $78, 564 Net Present Value ($80, 000) ($1, 436) Investment: 80,000 Cash inflows 14,000 for year 1 Cash inflows 16,000 for years 3, 4, and 5 Cash inflows 17,000 for years 5, 6, and 7 5,000 at year #7 Discount rate is 7% Yours : Year 0 2 3 4 5 6 7 7 TOTAL Project Discount Rate 0. 07 Equipment purchase price ($80, 000) Cash inflow from new equipment $14, 000 $16, 000 $16, 000 $16, 000 $17, 000 $17, 000 $17, 000 Salvage value $5, 000 Total cash in (out) $14, 000 $16, 000 $16, 000 $16, 000 $17, 000 $17, 000 $17, 000 $5, 000 Discount Factor (7%) 0. 9346 0. 8734 0. 8163 0. 7629 0. 7130 0. 6663 0. 6227 0. 6227 Present Value $13, 084 $13, 975 $13, 061 $12, 206 $12, 121 $11, 328 $10, 587 $3, 114 $89, 475 Net Present Value ($80, 000) $9, 475