# Investment Valuation accounting homework help

Investment Valuation accounting homework help

PLEASE DO NOT ACCEPT IF YOU CANNOT MEET DEADLINE OR DO NOT UNDERSTAND THE REQUIREMENTS:

The scenario is below is what needs to be followed and then the attached spreadsheet needs to be completed based on the scenario:

Over lunch, you and Cindy meet to discuss next steps with the expansion project.

â€œDo we have everything we need on sales and costs?â€ you ask. â€It must be time to compute the net present value (NPV) and internal rate of return (IRR) of the Apex expansion project.â€

â€œWe have the data from James and Luke regarding projected sales and costs, respectively, for the food packaging project,â€ says Cindy. â€œIt is feasible to project that we will receive a tax break from this implementation. I have information from our audit firm that indicates that future depreciation methods for taxes will be straight-line; however, the corporate rates will be reduced to 35% as we assumed in our weighted average cost of capital (WACC) calculation.â€

â€œThat sounds good,â€ you say.

â€œRight,” says Cindy. “You can use a WACC of 10% for the computation of the NPV and comparison for IRR.”

â€œIâ€™ve got the information I need from Luke and James,â€ you say. “Does this look right to you? Hereâ€™s what they gave me,â€ you say, as you hand a sheet of paper to Cindy.

â€œLetâ€™s look at this now while weâ€™re together,â€ she says.

The information you hand to Cindy shows the following:

• Initial investment outlay of \$30 million, consisting of \$25 million for equipment and \$5 million for net working capital (NWC) (plastic substrate and ink inventory); NWC recoverable in terminal year
• Project and equipment life: 5 years
• Sales: \$25 million per year for five years
• Assume gross margin of 60% (exclusive of depreciation)
• Depreciation: Straight-line for tax purposes
• Selling, general, and administrative expenses: 10% of sales
• Tax rate: 35%