Start with the partial model in the file Ch$13$ P$18$ Build a Model.xlsx$.$ Webmasters.com has developed a powerful new server that would be used for corporations' Internet activities. It would cost $$11$ million at Year $0$ to buy the equipment necessary to manufacture the server. The project would require net working capital at the beginning of each year in an amount equal to $12\%$ of the year's projected sales; for example, NWC$0=12\%($Sales$1).$ The servers would sell for $$25,500$ per unit, and Webmasters believes that variable costs would amount to $$18,000$ per unit. After Year $1,$ the sales price and variable costs will increase at the inflation rate of $4\%.$ The company's nonvariable costs would be $$2$ million at Year $1$ and would increase with inflation.

The server project would have a life of $4$ years. If the project is undertaken, it must be continued for the entire $4$ years. Also, the project's returns are expected to be highly correlated with returns on the firm's other assets. The firm believes it could sell $900$ units per year.

The equipment would be depreciated over a $5-$year period, using MACRS rates. The estimated market value of the equipment at the end of the project's $4-$year life is $$400,000.$ Webmasters.com's federal$-$plus$-$state tax rate is $25\%.$ Its cost of capital is $10\%$ for average$-$risk projects, defined as projects with a coefficient of variation of NPV between $0\mathrm{.}8$ and $1\mathrm{.}2.$ Low$-$risk projects are evaluated with a $7\%$ project cost of capital and high$-$risk projects at $13\%.$

Do not round intermediate calculations.

Develop a spreadsheet model, and use it to find the project's NPV$,$ IRR, and payback. Round your answer for the NPV to the nearest dollar and for the IRR and payback to two decimal places.

NPV$\_\_\_\_\_$

IRR $\_\_\_\_\_$

Regular payback period $\_\_\_\_\_$

Now conduct a sensitivity analysis to determine the sensitivity of NPV to changes in the sales price, variable costs per unit, and number of units sold. Set these variables' values at $10\%$ and $20\%$ above and below their base$-$case values. Round your answers to the nearest dollar. Use a minus sign to enter a negative value, if any. Issues in Capital Budgeting

a$.$ Developing a spreadsheet model, and using it to find the project's NPV$.$

$\backslash$table$[[$Equipment cost$,$ Year $0,$$$11,000,000$