Please answer them all! Thank you!

Assignment #5 (Set the entire homework up in an Excel spreadsheet and answer all the questions clearly marked in your spreadsheet. Submit your spreadsheet clearly identifiable by your name.) You are considering purchasing a machine (use your imagination) that will initially cost $345,000.00. The machine is expected to last 8 years, and you project that you can sell the worn out machine at the end of 8 years for $64,000,00 Annual operating cash inflows and outflows are projected as follows, and are assumed to occur at the end of each year: Both of years 1 and 2 , cash inflow $74,000.00, cash outflow expenses $20,000.00; both of years 3 and 4 , cash inflow $81,000.00, cash outflow expenses $26,000,00. In year 5 you have to shut down and rebuild the machine so cash inflows are only $41,000,00 and cash outflows are $44,000.00. In year 6 cash inflow is $65,000,00, and cash outflow expenses are $36,000,00. Finally, in both year's 7 and 8 cash operating inflow is $84,000.00 and cash operating expenses are $34,000.00. 3. Assume your firm can lock in a cost of Debt for this project at 6%(.06) annual rate. Also, assume the stockholders in your firm expect a return on equity that is 1 percentage points higher than the cost of debt. 3.a. Explain why the cost of equity for a proposed project like this would be higher than the cost of debt. 3.b. Your firm expects to finance this machine using 25% equity, and 75% debt. Calculate the weighted cost of capital that would be used in for an NPV analysis given these facts. 4. Calculate the net present value of this investment using the =NPV function in Excel using the weighted cost of capital that you calculated in 3.b. 4.b. Assuming the cash flow projections are all correct, and you can "lock in" your weighted cost of capital for the life of the project, would this project have a positive or negative impact on your companies' wealth? 5. Calculate the Intemal Rate of Return on this investment using the IRR function in Excel. 5.b. Could this proposed capital investment generate more than one possible IRR? Explain why or why not. Assignment #5 (Set the entire homework up in an Excel spreadsheet and answer all the questions clearly marked in your spreadsheet. Submit your spreadsheet clearly identifiable by your name.) You are considering purchasing a machine (use your imagination) that will initially cost $345,000.00. The machine is expected to last 8 years, and you project that you can sell the worn out machine at the end of 8 years for $64,000,00 Annual operating cash inflows and outflows are projected as follows, and are assumed to occur at the end of each year: Both of years 1 and 2 , cash inflow $74,000.00, cash outflow expenses $20,000.00; both of years 3 and 4 , cash inflow $81,000.00, cash outflow expenses $26,000,00. In year 5 you have to shut down and rebuild the machine so cash inflows are only $41,000,00 and cash outflows are $44,000.00. In year 6 cash inflow is $65,000,00, and cash outflow expenses are $36,000,00. Finally, in both year's 7 and 8 cash operating inflow is $84,000.00 and cash operating expenses are $34,000.00. 3. Assume your firm can lock in a cost of Debt for this project at 6%(.06) annual rate. Also, assume the stockholders in your firm expect a return on equity that is 1 percentage points higher than the cost of debt. 3.a. Explain why the cost of equity for a proposed project like this would be higher than the cost of debt. 3.b. Your firm expects to finance this machine using 25% equity, and 75% debt. Calculate the weighted cost of capital that would be used in for an NPV analysis given these facts. 4. Calculate the net present value of this investment using the =NPV function in Excel using the weighted cost of capital that you calculated in 3.b. 4.b. Assuming the cash flow projections are all correct, and you can "lock in" your weighted cost of capital for the life of the project, would this project have a positive or negative impact on your companies' wealth? 5. Calculate the Intemal Rate of Return on this investment using the IRR function in Excel. 5.b. Could this proposed capital investment generate more than one possible IRR? Explain why or why not