$**$PLEASE READ INSTRUCTIONS, DO THIS IN AN EXCEL AND UPLOAD$**$

Calculate the operating cash flows for each year for potential project. Then use those cash flows to calculate NPV$,$ IRR, PI and Payback period information answer the questions below. Turn in your excel sheet that shows your Proforma Income statement and calculations, and word document with your answers.

Suzanne is recently retired and enjoys quilting. She is considering starting a quilting business to keep her busy in her retirement. She has $2$ options when purchasing a long arm quilting machine.

A$)$ She can purchase a longarm quilting machine for $$17,000,$ with this machine she believes that she will be able to quilt $7\mathrm{.}5$ quilts a week.

B$)$ She could purchase an automated quilting machine for $$40,000,$ using this machine she believes that she will be able to quilt $4$ quilts a day for $5$ days a week.

In either case, Suzanne figures she can charge $4$ cents a square inch and make about $$70$ per quilt $($an average quilt is about $36$x$48$ inches$).$ She also figures that each quilt will cost her about $$20$ dollars in material $($batting and thread$).$ She expects to run her quilting company for $5$ years and expects that her sales and costs will each increase each year by $5\%.$ She will have no relevant fixed expenses as she will operate the business out of her own home. She will use straight$-$line depreciation for each of the $5$ years $($annual depreciation is $$3400$ for project A and $$8,000$ for project B$).$ Taxes are $21\%.$

Assume she has a $10\%$ discount rate if she takes project A and a $15\%$ discount rate if she takes project B$,$ calculate the:

NPV$?$

IRR?

PI ratio?

Payback period?

Assuming that the projects are mutually exclusive, which if any should she do$?$ Briefly explain why.