Project 2 Calculations must be done in Excel - You must create your own Spreadsheet do not copy and paste someone else's. Grant Thomas, the nancial advisor to Innovative Manufacturing is evaluating the following new investment in a manufacturing project:- The project has a useful life of 10 years. Land costs $5m and is estimated to have a resale value of $7m at the completion of the project. Buildings cost $4m, with allowable depreciation of 5% pa straight-line and a salvage value of $0.8m. Equipment costs $3rn, with allowable depreciation of 20% pa straight-line and a salvage value of $0.4m. An investment allowance of 20% of the equipment cost is available. Revenues are expected to be $5m in year one and rise at 10% pa. Cash expenses are estimated at $2m in year one and rise at 5% pa. The new product will be charged $300,000 of allocated head office administration costs each year even though head office will not actually incur any extra costs to manage the project. An amount of $200,000 has been spent on a feasibility study for the new project. The project is to be partially financed with a loan of $6m to be repaid annually with equal instalments at a rate of 5% pa over 10 years. Except for initial outlays, assume cash ows occur at the end of each year. The tax rate is 30% and is payable in the year in which profit is earned. The after tax required return for the project is 10% pa. Required (a) Calculate the NPV. Is the project acceptable? Why or why not? (b) Conduct a sensitivity analysis showing how sensitive the project is to revenues, cash expenses and to the cost of capital. Explain your results