$1.$ Pop Culture Corporation $($PCC$)$ is considering investing in two mutually exclusive projects, Project Alpha and Project Beta. Both projects require an initial investment in machinery and equipment.The following information is provided:

Project Alpha: This project involves manufacturing a new product. The initial investment for machinery and equipment is $$1,000,000.$ The company estimates that it can sell $10,000$ units of the product for the first year at a price of $$100$ per unit. Unit sales will grow at $10\%$ a year for the first $2$ years and at $5\%$ a year for the last $2$ years. The variable cost per unit is $$45$ in the first year and decreases by $$1$ per unit each year. Fixed costs associated with the project are estimated to be $$200,000$ per year and will grow at $2\%$ a year. The project's expected economic life is $5$ years. There is a salvage value on the machinery of $$100,000.$ Required net working capital is equal fo $28\%$ of the following year$$s sales $($in dollars$).$

Project Beta: This project involves setting up a service center. The initial investment for setting up the service center is $$1,000,000.$ The company expects to generate revenue of $$500,000$ per year, which will grow at $15\%$ a year for the first $2$ years and $8\%$ a year for the next $2$ years. Variable costs associated with the service are estimated to be $40\%$ of revenue, and will increase $($as a percentage of revenue$)$ by $2\%$ a year. Fixed costs are expected to be $$300,000$ per year. The project's expected economic life is $5$ years. The company expects to sell the business for $6\mathrm{.}5$x EBITDA at the end of the project life. Required net working capital is equal to $12\%$ of the following year$$s sales.

For both projects, use straight line depreciation to $0$ over the project life. The company$$s tax rate is $18\%.$ Calculate the following for both projects:

Net Present Value $($NPV$)$ using $10\%$ and $16\%$ discount rates

Internal Rate of Return $($IRR$)$

Discounted Payback Period, using $10\%$

Profitability Index $($PI$)$ at $16\%$ discount rate

Copy the $2$ worksheets for Alpha and Beta and make the following adjustments $($keeping items not mentioned as the original$)$:

Project Alpha: The initial investment for machinery and equipment is $$1,200,000.$ The company estimates that it can sell $8,500$ units of the product for the first year at a price of $$100$ per unit. Unit sales will grow at $15\%$ a year for the entire project life. There is a salvage value on the machinery of $$250,000.$ Required net working capital is equal fo $30\%$ of the following year$$s sales $($in dollars$).$

Project Beta: The initial investment for setting up the service center is $$1,200,000.$ Variable costs associated with the service are estimated to be $40\%$ of revenue, and will decrease $($as a percentage of revenue$)$ by $2\%$ a year. The company expects to sell the business for $6\mathrm{.}0$x EBITDA at the end of the project life.