2. Prepare a spreadsheet to estimate the project's amual after-tax cash flows. b. Calculate the investments internal rate of return and its net present value assuming zeto inflation. e. How do the internal rate of return and not present value change when you assume an inflation rate of 8 percent per year in price and variable cont per d. How do you explain the fact that inflation causes the internal rate of return to increase and the NPV to decrease? Does inflation make this investment more attractive or less attractivo? Why? The following information is available about an investment opportunity. Investment will occur at year 0 and sales will occur from your 1 to year 8. Use a nominal discount rate, calculated as i, = (1 + i)(1 + p) - 1, where i, is the real discount rate, and p is expected inflation Facts and assumptions Initial cost (5000) $28,000 Unit sales (000) 400 Selling price per unit, year 1 $60 Variable cost per unit, year 1 S42 Life expectancy (years) 8 Salvage value SO Depreciation Straight-line Tax rate 3796 Real discount rate 10.0% Inflation rate 0.096