6 27 28 29 30 31 32 33 34 15 36 40 41 C D H Project 1 A company that manufactures bicycles has an opportunity to begin maufacturing a new higher-end model, which has additional features from the models they currently make These features would require some new equipment to be purchsed. Because of the usk level involved in taking on a new product, management is trying to determine whether the returns will justify the risk The individuals within the top tier of management that are evaluating the project, have determined a 15% discount rate is appropriate for evaluation purposes. Management has asked you to prepare an anlarsis of the project giving the following information and assumptions 1) The new equipment will have a cost of $358,000, a salvage value of $10,000 and a 10-year useful ife Straight line depreciation will be Pro The pro com 2) The projected revenues, costs, and results for each of the 10 years of this project are as follows Sales $315,000 Less Manufacturing costs $190,000 Depreciation 34,800 Shipping costs 17,000 Administrative costs Income before income taxes Income tax expense Net income 15,000 256,800 58,200 23,250 $34,920 Instructions: Using the template below, + Instr Using a) compute the annual rate of return b) compute the payback penod a) c) compute the NPV using the determined 15% discount rate. Is this proposal aptable aring this diet rate d) compute the NPV using a 12% discount rate so that Management has a compauson for analyses Is this proposal aceptable asing this discount rate? b) In order to get full points for this project: Cels in sed require pot of TEXT OR VALUES Cels in green on the template should be a FORMULA Compute the annual rate of setan 42 43 Net Income $34,920 44 Initial Investment 358,000 45 Annual Rate of Return $0 2 46 47 48 b) 49 50 $34,970 51 34,500 Compute the payback penod. Note that you will need to active at the net annual cash flow FIRST Net Income Add Depreciation 52 Annual cash intow 69,720 53 54 Initial Investment 358,000 55 Annual cash flow 69,720 56 Paypack Period 510 57 inser PILA B C D E F c) Loyout Compute the NPV using the discount aste of 15% and the PV Exed foamide You should ist out your pots in the pronded spaces Present value of cash flows d) Present value of cash outflows Net present value 35.380 (352,380) this properalaropale wing this diacet rate? Respond Yes or No Ye I Compute the NPV uning the discount cate of 12% and the PV Excel founds where required. You should ist out your inputs in the provided spaces Present value of cash inflows Present value of cash outflows Net present value Is this proposal acceptable sing this dit rate? Berpand Your Ne