1. The Ajax Semiconductor company is attempting to evaluate the profitability of adding another inte- grated circuit production line to its present operations. The company would need to purchase two or more acres of land for $275K. Land is considered as non-depreciable assets, and its value is assumed to remain constant over time. The facility would cost $70M and have no market value at the end of five years. The facility could be depreciated, using a 150% DB method for five years. The new production line is expected to generate additional $30M gross income and $8M operating expenses each year for five years.The firms effective income tax rate is 20%.

a) Set up a table and determine the ATCF for this project.

b) Is this investment acceptable when the after-tax MARR is 15%/year?

c) Conduct break-even analysis for MARR and tax rate.

d) Conduct sensitivity analysis for annual revenues and expenses.

e) Conduct scenario analysis for annual revenues and expenses assuming that they can change by 20%.