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435-01 Fall 2020 Aardvark Case Due Monday 11/16 by 6:00 PM Aardvark lingincering isa relatively small company in Eastern Washington that produces avionic parts and equipment both the commereial airline industry and the military. -Ille company recently won several contracts in 2020 for production starting in 2021 As a result, the company needs to expand its production and testing capabilities, As CFO of Aardvark. you are responsible for conducting thc analysis of the capilal projcct needed to allow the company fulfill the contracts, Detailed discussions the sales and tnatketing personnel indicate that sales in the first year would bc S72 million and grow at 1%, pcr year through thc ten year of the project. Accounting that the sales. general and adminislrativc costs would be fixed at million the life 01' the project, Accounting also estimates working capital needs at of revenue. Engineering and Manulimcluring have indicated that the COSI of goods will be 61% of sales. equipment is to million with an additional million for ten year economic falls within thc 7 yen" MAC'RS class Engineering it can bc sold million at the end of the project life. new production facilities will also a new building at million. building has a life and is required to straighl magkct value olthe building at Ot' prolect is 'o be niillion. Aardvark's marginal lax rate is and their initial discount rate is which is 10 the weighted cost of capital. Ille risk is similar to c."npany risk. NOW Will (o net value. and 1Myback yont