Please include formulas

42 Part2 43 Webmasters.com has developed a powerful new server that would be used for corporations' Internet activities. 44 It would cost $25 million at Year 0 to buy the equipment necessary to manufacture the server. 45 The project would require net working capital at the beginning of each year in an amount equal to 10% of the year's 46 projected sales; for example, NWCO = 10% (Sales 1). 47 The firm belleves it could sell 890 units per year. The servers would sell for $31.99 thousand per unit and Webmasters 48 believes that variable costs would amount to $18.5 thousand per unit. 49 After Year 1 , the sales price and variable costs will increase at the inflation rate of 3%. 50 The company's nonvariable costs would be $1.6 million at Year 1 and would increase with inflation. 51 The server project would have a life of 4 years. If the project is undertaken, it must be continued for the entire 4 years. 52 Also, the project's returns are expected to be highly correlated with returns on the firm's other assets. 53 The equipment would be depreclated over a 5-year period, using MAcr. rates glven in the Input Data section below. 54 The estimated market value of the equipment at the end of the project's 4 -year life is 53025 thousand. 55 Webmasters' federal-plus-state tax rate is 25%. 56 Its cost of capital is 12% for average-risic projects, defined as projects with a coefficient of variation of NPV between 1.5 57 and 2.5. Low-risk projects are evaluated with a WACC of 6%, and high-risk projects at 18%. 58 59 Develop a spreadsheet model using the input data below, and use it to find the project's NPV, IRR, MIRR, and payback, 60 assuming this is an average risk project initially. 78 Treplace values in yellow cells with formulas. Otherwise your sensitivity and scenario 79 Intermediote Calewlations 79 Intermediate Calculations 81 Sales revenue 82. Required level of net operating working capital 84 Annual depreciation expense. 85 Ending Book Value 86 **-Denote cash outflows as negative values and Inflows as positive values, "* Now conduct a sensitivity analysis to determine the sensitivity of NPV to changes in the sales price per unit (excl. depr.). Now conduct a scenario analysis. Assume that there is a 25% probability that best-case conditions, with each of the variables discussed in Part b being 20% better than its base-case value, will occur. There is a 25% probability of worstcase conditions, with the variables 20% worse than base, and a 50% probahility of base-case conditions. If the project appears to be more or less risky than an average project, find its risk-adjusted NPV, IRR, and payback. 147 149 CV range of firm's average-risk project: 159 Discussion: On the basis of information in the problem, would you recommend that the project be accepted? 5 points 160 161 162 163 42 Part2 43 Webmasters.com has developed a powerful new server that would be used for corporations' Internet activities. 44 It would cost $25 million at Year 0 to buy the equipment necessary to manufacture the server. 45 The project would require net working capital at the beginning of each year in an amount equal to 10% of the year's 46 projected sales; for example, NWCO = 10% (Sales 1). 47 The firm belleves it could sell 890 units per year. The servers would sell for $31.99 thousand per unit and Webmasters 48 believes that variable costs would amount to $18.5 thousand per unit. 49 After Year 1 , the sales price and variable costs will increase at the inflation rate of 3%. 50 The company's nonvariable costs would be $1.6 million at Year 1 and would increase with inflation. 51 The server project would have a life of 4 years. If the project is undertaken, it must be continued for the entire 4 years. 52 Also, the project's returns are expected to be highly correlated with returns on the firm's other assets. 53 The equipment would be depreclated over a 5-year period, using MAcr. rates glven in the Input Data section below. 54 The estimated market value of the equipment at the end of the project's 4 -year life is 53025 thousand. 55 Webmasters' federal-plus-state tax rate is 25%. 56 Its cost of capital is 12% for average-risic projects, defined as projects with a coefficient of variation of NPV between 1.5 57 and 2.5. Low-risk projects are evaluated with a WACC of 6%, and high-risk projects at 18%. 58 59 Develop a spreadsheet model using the input data below, and use it to find the project's NPV, IRR, MIRR, and payback, 60 assuming this is an average risk project initially. 78 Treplace values in yellow cells with formulas. Otherwise your sensitivity and scenario 79 Intermediote Calewlations 79 Intermediate Calculations 81 Sales revenue 82. Required level of net operating working capital 84 Annual depreciation expense. 85 Ending Book Value 86 **-Denote cash outflows as negative values and Inflows as positive values, "* Now conduct a sensitivity analysis to determine the sensitivity of NPV to changes in the sales price per unit (excl. depr.). Now conduct a scenario analysis. Assume that there is a 25% probability that best-case conditions, with each of the variables discussed in Part b being 20% better than its base-case value, will occur. There is a 25% probability of worstcase conditions, with the variables 20% worse than base, and a 50% probahility of base-case conditions. If the project appears to be more or less risky than an average project, find its risk-adjusted NPV, IRR, and payback. 147 149 CV range of firm's average-risk project: 159 Discussion: On the basis of information in the problem, would you recommend that the project be accepted? 5 points 160 161 162 163