Start with the partial model in the file Ch13 P18 Build a Model.xlsx. Webmasters.com has developed a powerful new server that would be used for corporations Internet activities. It would cost $10 million at Year 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 10% of the year's projected sales; for example, NWC 0 =10\%(Sales 1 ). The servers would sell for $24,000 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 3The company's nonvariable costs would be $1 million at Year 1 and would increase with inflation.

Excel Actrity: Issues in Capital Buopeting Start with the partial model in the file Ch13 P18 Build a Model.x/sx. Webmasters.com has developed a powerful new server that would be used for corporations' Internet activities. It would cost $10 million at Year 0 to buy the equipment necessary to manufacture the server. The project would require net working capital at the beginning of each year in an amount equal to 10% of the year's projected sales; for example, NWCo =10%($ ales, ). The servers would sell for $24,000 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 3%. The company's nonvanable costs would be $1 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 afe expected to be highly cortelated with returns on the firm's other assets. The firm believes it could sell 1,000 unats per year. The equipment would be depreciated over a S-year penod, using MACRS rates. The estimated market value of the equipment at the end of the project's 4 -year life is $500,000. 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 varation of NPV between 0.8 and 1,2. Low-risk projects are evaluated with an 8% project cost of capital and high-risk projects at 13%. The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. Download sprendshert Ch13. P18. Build an Model-3b18toxiss a. Develop a spreadhheet model, and use is 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. NFP IRR Regular poyback period b. Now conduct a sensitivity analysis terdetermine the sensitivity of NFN to changes in the siles 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 dollat. Use a minus sign to enter a negative value, if any. Choose-the correct graph