1. Papa Bear Company, show all work. Submit in Excel. A project requires an initial investment of $600,000 and is expected to produce additional sales revenue of $380,000 per year, which thereafter should grow at 3% plus the rate of inflation. Expect inflation to be 4%. Costs of goods sold are estimated at 65% of sales. It is expected that cashflows will carry on for 6 years. . . In year 7 the project will wind down, and revenue will be half of the year 6 amount. The project will require additional working capital of 10% of sales. As working capital ramps up, charge of the year 1 value (5% of sales) in Year 0 and then apply the additional amount required each year. Simply apply the same growth rate as a use of cash. At the end of the project life, assume all the working capital is recovered in year 7. Papa Bear's public debt trades at 8% and they estimate their cost of equity at 15%, the debt/equity composition is 40/60 Papa Bear expects no salvage value Scenario One: Under the old tax law, pre-2018, corporate income taxes were 35% and assets could be depreciated on a modified accelerated cost recovery system (MACRS) schedule which permitted depreciation of 20%, 32%, 20%, 16% and 12% of the asset purchase cost in years 1-5 respectively. Apply those percentages to the initial investment to calculate the depreciation in each of years one through five. Fill (only) these cells with yellow paint NPV (1 pt), and IRR (1 pt); no partial credit. (Total is 2pts) Scenario Two: Under the 2018 tax law, Papa Bear pays corporate taxes at a rate of 21% and - again under this new tax law-accelerated depreciation allows the depreciation of the entire initial investment for tax purposes in the first year. Fill (only) these cells with yellow paint: Cost of Capital (1 pt), NPV (1 pt), IRR (1 pt), no partial credit. (Total is 3 pts)

1. Papa Bear Company, show all wok. Sutmat in Eacel. - A project requires an intial investment of $600,000 and is expected to produce additional sales revenue of $380,000 per yoar, which thereather should grow at 3% plus the rate of inflation. Expect inflation to be 4%. - Costs of poods sold are entimated at SSt of sales. It is expecied that cashifows will carry on for 6 year. - In year 7 the project will whd down, and revenue will be half of the year 6 amount. - The project will require additional wonking capial of 10 S of sales. As working capital ramps up, charpe X of the yeur 1 value (SS of sales) in Year 0 and then apply the additional amount required each year. Simply apply the same groweh rate as a use of cash. At the end of the project ife, assume at the working captal is recovered in year 7. - Papa Bears public dett trades at s\$ and they estimate their cost of equity at 15%, the deblequity componition is 40se - Papa Bear expecta no salvage value Scenario One: Under the old tax law, pre-20t8, corporale income taues were 35% and assets could be depreciated on a modifid accelerated cost necovery system (MACRS) schedule which permitted depreciation of 20K,32K,20K,16K and 124s of the asset purchase cost in years 1.5 respectively. Apply those percentages to the initial Investment to calculate the depreciation in each of years one through five. Fat (only) these celis with yelow paint NPV (1 p0. and IFR ( 1 pQ: no partial credi. (Total is 2pts) Scenario Twx Under the 2018 tax law, Papa Bear pays corporate taxes at a rate of 21% and - again under this new tax law-accelerated degreciation aliom the depreciation of the entire initial investment for tax purposes in the frat yoar. FAt (only) these cells with yellow paint: Cost at Capear (1 ph, NPV (1 p0, IRR (1 pt), no partial credit. (Total is 3 pts)