Please help answering this project

Capital Budgeting Decisions CASE STUDY Learning Objectives 1. Understand how to use EXCEL Spreadsheet (a) Develop proforma Income Statement Using Excel Spreadsheet (b) Compute Net Project Cashflows, NPV, and IRR (c) Develop problem-solving and critical thinking skills 3333%| 2000%| s4 29% 10,00% a 750% 2442 .52 713 and make long-term investment decisions 5.76 1) Life Period of the Equipment-4 years 2) New equipment cost 3) Equipment ship & install cost 4) Related start up cost 5) Inventory increase 6) Accounts Payable increase 7)Equip, salvage value before tax 8) Sales for first year (1) 9) Sales increase per year 10) Operating cost (60% of Sales) S 200,000 $ (120,000) Use 3-yr MACRIS 5% ($5,000) $25,000 $5,000 $15,000 (as a percent of sales in Year 1) 11) Depreciation 12) Marginal Corporate Tax Rate (T) 13) Cost of Capital (Discount Rate) 10% Faning dara in the cells colored only STIMATING Initial Outlay (Cash Flow, CFo,T-0 CFO CF1 CF3 CF2 CF4 Year 1) Equipment cost 2) Shipping and Install cost 3) Start up expenses Total Basis Cost (1+2+3) 4) Net Working Capital Total Initial Outlay reciation Calculation Depreciation Basis # of years: Macrs Operating Cost Depreciation 3 years EBIT Taxes A B Depreciation S0 s0 S0 Year Net Income Basis Macrs % Add back Depreciation Total Operatina Cash Flow Total Operating Cash Flow S0 1) Change in net WC Salvage value (after tax) Total Salvage value(1 marginal tax rate) Project Net Cash Flows Payback 0,00 PV Payback Period Profitability Index #DIV/O! Discounted Payback.00 Projected CF Year Cummulative C Count PLEASE RESPOND TO THESE QUESTIONS ON ANOTHER TAB Payback period years 1 Would you accept the project based on NPV, IRR? Would you accept the project based on Payback rule if project cut-off is 3 years? Impact of 2017 Tax Cut Act on Net Income, Cash Flows and Capital Budgeting (Investment) Decisions Estimate NPV, IRR and Payback Period ot the project it tax rate equals to 21%, would you accept or reject the project? #2 a) Year Discount factor Discounted CF Cummulative CF Count S0 S0 S0 S0 S0 b)As a CFO of the firm, which of the above two scenario (1) or (2) would you choose? Why? #3 How would you explain to your CEO what NPV means? #4 What are advantages and disadvantages of using only Payback method? #5 What are advantages and disadvantages of using NPV versus IRR? #6 Explain the difference between independent projects and mutually exclusive projects. Payback period When you are confronted with Mutually Exclusive Projects and have coflicts with NPV and IRR results, which criterion would you use (NPV or IRR) and why