(a) Develop a proforma project income statement using an Excel spreadsheet (b) Compute net project cash flows, NPV, IRR and Payback period (c) Perform sensitivity and scenario analyses (d) Develop problem-solving and critical thinking skills

Assignment Instructions: this assignment, which combines using Excel to perform calculations. The use of formulas and cell references (rather than hard typing in numbers) should be used in all cases where they can. To guide you, the cells shaded gray are where formulas, numerical inputs or calcuations are needed in order to complete the assignment.

Your grade for this assignment will be determined by a combination of the correctness of your financial math, good use of Excel functionality and spreadsheet formatting, and the completeness of your answers to the questions.
In this assignment, you are evaluating a potential capital investment project that has a 4 year life. The financial details are as follows:
1) Useful life of the equipment (years)		4
2) New equipment cost		$ 240,000
5) Inventory increase		$ 25,000
6) Accounts payable increase		$ 5,000
7) Equipment salvage value (end of life)		$ 15,000
8) Projected sales for year 1		$ 200,000
9) Projected sales growth per year
Low Case		2%
Base Case		5%
High Case		8%
10) Operating cost (as a % of sales)	60%
11) Depreciation (straight line) per year
12) Corporate marginal tax rate (T)		21%
13) Cost of capital or discount rate (r)		10%
PART 3A: Use the Excel cells from Part 1A above to run a sensitivity analysis on revenue growth. Recall from above the high case has 8% revenue growth, base case is 5% and low case is 2%. Edit your Part 1A spreadsheet to account for these different growth rates and observe the changes to NPV, IRR and Payback period. Record the results in the table below. When you are done, put your Part 1A spreadsheet back to Base Case before you submit your assignment.
Sensitivity Analysis Table	Growth (%)	NPV ($'s)	IRR (%)	Payback
Low Growth	2%
Base Case (from part 1A)	5%
High Growth	8%