Please use the provided template to solve the question and show the formula in working cell.

2-7 INTRODUCTORY PROJECT VALUATION Steve's Sub Stop (Steve's) is considering invest- ing in toaster ovens for each of its 120 stores located in the southwestern United States. The high-capacity conveyor toaster ovens, manufactured by Lincoln, will require an initial investment of $15,000 per store plus $500 in installation costs, for a total investment of $1,860,000. The new capital (including the costs for installation) will be depreciated over five years using straight-line depreciation toward a zero salvage value. Steve's will also incur additional maintenance expenses totaling $120,000 per year to maintain the ovens. At present, firm revenues for the 120 stores total $9 million, and the company estimates that adding the toaster feature will increase revenues by 10%. a. If Steve's faces a 30% tax rate, what expected project FCFs for each of the next five years will result from the investment in toaster ovens? b. If Steve's uses a 9% discount rate to analyze its investments in its stores, what is the project's NPV? Should the project be accepted? Given Incremental revenue growth for years 1 Revenues (current) Incremental Revenues CAPEX for year 0 CAPEX for years 1-5 Maintenance expense for years 1-5 Depreciable life of ovens Depreciation Expense Tax rate Discount Rate 10.0% $ 9,000,000 $ 900,000 $ 1,860,000 $ $ 120,000 per year Solution Legend = Value given in problem = Formula/Calculation/Analysis required = Qualitative analysis or Short answer required = Goal Seek or Solver cell Crystal Ball Input = Crystal Ball Output 5 years 30% 9% Solution 0 1 900,000 $ Year 2 900,000 $ 3 900,000 $ 4 900,000 $ 5 900,000 Incremental Revenues Incremental Depreciation Incremental maintenance expense Incremnental EBIT Taxes NOPAT Plus: Depreciation Less: CAPEX Less: New working capital needs Project Free Cash Flow (PFCF) : Net Present Value Internal Rate of Return Should the Project be Accepted