Question

Please show all work in an Excel spreadsheet, showing all calculations in each cell.

4. Mini Case Analysis: Aguilera Acoustics, Inc. (AAI), projects unit sales for a new seven octaye voice emulation implants as follows Unit Sales 108.000 127,000 115,000 98,000 84,000 Year Production of the implants will require S1,500,000 in net working capital to start and additional net working capital investments each year equal to 15 percent of the projected sales increase for the following year. Total fixed costs are S1,250,000 per year, variable production costs are S225 per unit, and the units are priced at S345 each. The equipment needed to begin production has an installed cost of S23,000,000. Because the implants are intended for professional singers, this equipment is considered industrial machinery and this qualifies as seven-year MACRS property. In five years, this equipment can be sold for about 20 percent of its acquisition cost. AAIis in the 25 percent marginal tax bracket and has a required return on all its projects of 18 percent. Based on these preliminary project estimates, what is the NPV of the project? What is the IRR?

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Home nert Page Layout Formulas Data Review View dd-Ins E AutoSum ー E ゴWrap Text Copy B 1 프 . Ej-., Δ. : r_一 逻锂函Merge & Center. $, % , 弼,8 conditional Format . Cell Insert Delete Format Paste Sort &Find & Format Painter Formatting as Table Styles2 Clear Clipboard Editing LK90 UNITS 108000 345 225 127000 345 225 115000 98000 345 225 4 84000 90 225 225 YEAR COST OF MACHINE NWC SALES (UNITS X SP) VARIABLE COST (UNITS X VC) FIXED COST DEPRECIATION PBT TAX PAT DEPRECIATION CFAT AFTER TAX SALVAGE VALUE RECOVERY OF NWC TERMINAL CFAT 0 879750 37260000 43815000 39675000 24300000 28575000 25875000 1250000 1200001250000 3286700 5632700 4022700 84233008357300 8527300 2105825 2089325 2131825 6317475 667975 6395475 3286700 5632700 4022700 9604175 1190067510418175 983250 724500 33810000 22050000 -1500000 621000 28980000 18900000 1250000 2053900 6776100 16940295 5082075 2053900 7135975 97 2872700 7637300 1909325 5727975 2872700 8600675 100 101 102 103 104 105 106 (4 トト 4732825 SEE NEXT IMAGE 258000 SEE NEXT IMAGE -24500000 9604175 11900675 10418175 8600675 12126800.0 , REPLACEMENT (STats | NPV . BETA LEVERED 9う 福 MIRR NPV İRR REPLACEMENT S HPR GMAM EAC MACRS LEASE- RATIOCASHBUDGET / wacc . BOND EPS EBIT - - rences: ED12 130% 03:13 01-02-2019File Home nert Page Layout Formulas Data Review View dd-Ins s Cut aCopy Σ AutoSum Calibri ー E ゴWrap Text General в 1 프 . Ej-., Δ. : rーー 逻锂函Merge & Center. $, % , 弼,8 C Paste Conditional Format CeInsert Delete Format Formatting, as Table w styles. ▼ ㆆ ▼ Sort &Find & 2 ClearFe Select Edting Format Painter Clipboard Font Alignment Number Styles Cells LL115 Formula Bar LM 9604175 11900675 10418175 La. 7135975 4732825 SEE NEXT IMAGE LK LN LO LP 86006795 103 104 105 106 107 108 109 110 CFAT AFTER TAX SALVAGE VALUE RECOVERY OF NWC TERMINAL CFAT PV FACTOR @18% 258000 SEE NEXT IMAGE 24500000 9604175 1190067510418175 8600675 12126800.0 0.4371 0.8475 0.7182 0.6086 0.5158 24500000 8139131.36 8546879.496340822.944436132.485300736.04 8263702.31 ANS 1 NPV- ANS 2: IRR 8263702.31 31.99% IRR(LL106:LQ106) 112 113 114 115 116 118 119 120 121 MIRR NPV IRR REPLACEMENT S- HPR GMAM - EAC MACRS LEASE. RATIOCASHBUDGET wacc BOND ( EPS EBIT REPLACEMENT STats | NPV BETA LEVERED erences: B46 福 130% 03:14 01-02-2019Home nert Page Layout Formulas Data Review View dd-Ins as Cut aCopy Σ AutoSum ー E ゴWrap Text в 1 프 . Ej-., Δ. : rーー 逻锂函Merge & Center. $, % , 弼,8 C Paste Conditional Format CeInsert Delete Format Formatting, as Table w styles. ▼ ㆆ ▼ Sort &Find & 2 ClearFe Select Edting Format Painter Clipboard Font Alignment Number Cells MG88 Formula Bar LV LW LX LZ MA MB MC MD ME MF MG MH MI 89 90 YEAR 91 92 93 94 95 96 97 98 99 RECOVERY OF WORKING CAPITAL 100 YEAR 101 102 103 104 105 106 (4 トト1 | , . MIRR NPV IRR REPLACEMENT S . . HPR GMAM . . EAC MACRS COST 23000000 SALVAGE VALUE-20% OF 23000000 MACRS DEPRECIATION BOOK VALUE COST -DEPRE 1 14.29 3286700.00 19713300.00 2 24.49 5632700.00 14080600.00 3 17.49 4022700.00 10057900.00 4 12.49 2872700.00 7185200.00 8.93 2053900.00 5131300.00 8.92 2051600.00 3079700.00 8.93 2053900.00 1025800.00 0.00 SALVAGE VALUE- BOOK VALUE AT THE END OF 5 YEARS = PROFIT ON SALE TAX ON PROFIT ON SALE OF ASSET 25% TAX AFTER TAX SALVAGE VALUE 4600000 5131300 531300 132825 6 4732825 8 4.46 1025800.00 WORKING CAPITAL 0-1500000 1 -983250 2 621000 3 879750 4 724500 5 -258000 RECOVERY IN LAST YEAR WRITE POSITIVE VALUE IN STATEMENT, AS IT IS RECOVERY LEASE . RATIOCASHBUDGET / wacc , BOND EPS EBIT , REPLACEMENT , STats | NPV . BETA LEVERED ?う 福 erences: B46 130% 03:14 01-02-2019

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