A proposal to spend $$2\mathrm{.}1$ billion to construct production operations in an existing empty building $($owned by your company along with the land$)$ is being contemplated to produce a new product $($the existing building has been depreciated to a value of $$0,$ but the land has a current book value of $$35$ million; the land together with the existing empty building could be sold for $$35$ million today$).$ The $$2\mathrm{.}1$ billion factory investment is expected to last $25$ years $($but can be completely depreciated immediately for tax purposes$),$ and it along with the land is expected to be sold for $$200$ million at the end of the $25-$year useful life. The factory is expected to produce $110,012$units per year that are forecast to be sold for a price of $$29,900$ each. Variable costs $($production labor, raw materials, marketing, distribution, etc.$)$ are predicted to be $$26,300$ per unit. Fixed costs $($administration$,$ maintenance, repairs, utilities, insurance, real estate taxes, etc.$)$ are expected to be $$88$ million per year. The tax rate is $21\%.$ The project will require $$89$ million in inventory $($raw materials and finished products$)$ as well as $$74$ million in receivables $($credit for customers$).$ An extra $$22$ million in cash $($i$.$e$.,$ precautionary bank deposits and short$-$term marketable securities held as liquidity reserves$)$ is required as a safety stock to provide financial flexibility $($that enables avoiding running out of cash in case of temporary declines in operating cash flows$).$ Suppliers $($companies which sell the parts and raw materials that are used in the production of the $110,012$ units produced by the factory$)$ are expected to provide short$-$term trade credit that is expected to sum to $$98$ million in accounts payable while short$-$term accrual financing of $$46$ million is supplied by the employees $($who don't get paid until the end of the month$).$

$1)$Compute the NPV based on the above initial forecasts

$2)$ Compute the IRR

$3)$ Indicate the change in shareholder wealth $($i$.$e$.,$ the increase or decrease in the company's equity market capitalization$)$ that would occur as a result of undertaking this project

$4)$ Determine if the project should be undertaken

$5)$ Compute the Payback Period $($and reevaluate the project if the company requires a Payback Period of $7$ years$)$

$6)$ Compute equivalent annual cash flow $($EAC$)$ of the project evaluated in d$\mathrm{.}1$ and compare that to another project involving the manufacture of a mutually exclusive alternative product that has been developed and that would have an annual EAC of $$42$ million if it were put into production $($using a factory that would last $15$ years before being replaced$)$ and re$-$evaluate the project in d$\mathrm{.}1$ in a recurring context.

$7)$ Compute the NPV if demand is only $60,012$ units per year expected $($but everything else is the same as initially forecast$).$

$8)$ Compute the NPV if variable costs are $8\%$ higher than initially expected $($but everything else is the same as originally forecast$).$

$9)$ Compute the sensitivity of NPV to a change in unit sales

$10)$ Compute the minimum sales price per unit to get an NPV of at least $$0$

$11)$ Compute the NPV if prices and all costs were expected to rise each year by the expected annual U$.$S$.$ inflation rate $($as estimated per b$\mathrm{.}11),$ but everything else is the same as initially forecast.

$12)$ Explain the impact on the dollar NPV in d$\mathrm{.}11$ if the entire project was to be undertaken in Europe with all prices and costs paid in euros $($and with the given dollar amounts representing the values translated at current exchange rates between euros and dollars$),$ assuming that future changes in the exchange rate between dollars and euros are expected to equal the difference between European inflation rate and U$.$S$.$ inflation.

$13)$ Assume that, if you undertake the project, you can alternatively install a different energy system that is more environmentally friendly $($such as solar$)$ that requires an incremental investment of $$59$ million and is expected to initially lead to incrementally lower energy costs $($that reduce after$-$tax cash outflows by $$4$ million per year for the first $6$ years of the project and are expected to reduce after$-$tax cash outflows of $$7$ million per year from year $7$ through year $25$ of the project$).$ Compute the incremental NPV of this alternative energy system

$14)$ Evaluate any ethical considerations involved in making the decision in d$\mathrm{.}13.$

$15)$ Indicate the effect on the NPV computed in d$\mathrm{.}1$ if your company had previously $($over the last few years$)$ spent $$61$ million to research and develop the product that your company is now evaluating producing.

$16)$ Compute the effect on the NPV in d$\mathrm{.}1$ if your company needs to issue new shares of stock to fund the investment and the flotation costs of selling those new shares is $9\%($and decide whether the project should or shouldn't be undertaken if such sales of new shares of stock need to be made to fund the investment$).$