Problem $12-21$

You must analyze a potential new product$-$a caulking compound that Cory Materials' R&D people developed for use in the

residential construction industry. Cory's marketing manager thinks the company can sell $115,000$ tubes per year at a price

of $$3\mathrm{.}25$ each for $3$ years, after which the product will be obsolete. The purchase price of the required equipment, including

shipping and installation costs, is $$175,000,$ and the equipment is eligible for $100\%$ bonus depreciation at the time of

purchase. Current assets $($receivables and inventories$)$ would increase by $$35,000,$ while current liabilities $($accounts payable

and accruals$)$ would rise by $$15,000.$ Variable cost per unit is $$1\mathrm{.}95,$ and fixed costs would be $$70,000$ per year. When

production ceases after $3$ years, the equipment should have a market value of $$15,000.$ Cory's tax rate is $25\%,$ and it uses

a $10\%$ WACC for average$-$risk projects.

a$.$ Find the required Year $0$ cash investment outlay after bonus depreciation is considered and the project's annual cash flows.

Then calculate the project's NPV$,$ IRR, MIRR, and payback. Assume at this point that the project is of average risk.

Part $1.$ Key Input Data

Equipment cost plus installation

Increase in current assets

Increase in current liabilities

Unit sales

Sales price per unit

Variable cost per unit

Variable cost per unit $($in dollars$)$

Fixed costs

Market value of equipment after $3$ years.

Part $2.$ After$-$Tax Salvage Value at end of Year $3$

Equipment

Estimated Market Value

Tax Basis

Expected Gain or Loss

Taxes paid or tax credit

After$-$tax salvage value

$***$ How to calculate the Excel formula as well please$***$