A widget factory has the following parameters:

• Factory Construction Cost: $150,000 / 1,000 widgets of annual production capacity
• Annual Production Capacity: 45,000 widgets/year
• Widget Contracted Sale Price: $70 / widget, 2.0% annual price escalation
• Factory Operating Expense: $50 / widget, 1.0% annual escalation
• Depreciable Basis: 100% of factory construction cost; 100% allocated to 5-year MACRS
• Operations Start: December 31, 2017
• Year 1 interest expense: $200,000
• Annual interest rate: 5%
• Annual principal amortization: 5% of principal balance

Asks:

1. Build out a 5-year forecast of levered after-tax widget factory cash flows from the start of operations in excel. Estimate the capital structure used in building this factory.
2. Describe why a buyer with taxable income from other unrelated businesses might value this project differently.