Question: **Please Complete in Excel and SHOW FORMULA'S** You are considering purchasing a machine to produce Footballs. The cost of the machine is $100,000 and its

**Please Complete in Excel and SHOW FORMULA'S**

You are considering purchasing a machine to produce Footballs. The cost of the machine is $100,000 and its expected life span is 8 years. The machine will have an annual production of 550,000 balls. The price of a Football is today $0.20, and its expected to rise by 10% each year. The material used to produce a Football costs $0.08 and its expected to rise by 2% a year. To operate the machine youll need two workers, each earning an annual salary of $30,000. According to their contracts their salaries will rise by 7% a year starting in the third year. The real discount rate is 4%, the expected inflation is 5%, and the corporate tax rate is 40%.

1) Calculate the NPV of the project using nominal values.

2) Repeat the calculation using real values.

**Please Complete in Excel and SHOW FORMULA'S**

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