SpaceTex is planning on a project that will need an initial investment in fixed asset of $5,000,000. A bank has offered to finance it at 6.5% annual interest. The investment will fully depreciate straight-line over 8 years and at the last year it will be sold at 15% of initial cost. Your company has spent $200,000 towards research and it estimates that the project will generate an incremental annual revenue of $2,850,000 for the next 8 years. The variable costs for the next 8 years will be 10% of revenues while annual fixed cost will be $500,000. There is also a plan on using one of company's properties to be rented for $50,000 annually for the project. Net working capital at the start will require $150,000 and will be fully recovered at the end of 8 years. A. Prepare an excel report of projected cash flows: Operating Cash flows, Cashflows due to changes in net working capital, cash flows for capital spending. B. Calculate NPV, IRR and Payback Period.

SpaceTex is planning on a project that will need an initial investment in fixed asset of $5,000,000. A bank has offered to finance it at 6.5% annual interest. The investment will fully depreciate straight-line over 8 years and at the last year it will be sold at 15% of initial cost. Your company has spent $200,000 towards research and it estimates that the project will generate an incremental annual revenue of $2,850,000 for the next 8 years. The variable costs for the next 8 years will be 10% of revenues while annual fixed cost will be $500,000. There is also a plan on using one of company's properties to be rented for $50,000 annually for the project. Net working capital at the start will require $150,000 and will be fully recovered at the end of 8 years. A. Prepare an excel report of projected cash flows: Operating Cash flows, Cashflows due to changes in net working capital, cash flows for capital spending. B. Calculate NPV, IRR and Payback Period