Ahlul Hair Company is considering purchasing new equipment to develop hair restoration product. The product will require some work outdoors and will contaminate as small area of the property. The product is likely to remain on the market for only five years. The equipment would be fully depreciated at the end of five years. The equipment will have no value at the end of this time and will be scrapped. Ahlul uses straight-line depreciation for tax purposes, depreciating the property over five years. The tax rate is 30% and Ahlul uses a 8% discount rate in investment proposals. The working capital would be released for other uses at the end of the five years. Investment in equipment required-$300,000 Working Capital required-$80,000 Annual cash receipts before taxes-$200,000 Annual cash expenses before taxes-$100,000 Cost of restoring the land at the end of the project-$30,000.

Note that to receive full credit, you must use Excel and follow the steps below Steps 1. Compute the NPV and IRR: 1. Put in the year. Don't forget to start with time. 2. Put in the interest rate (not the tax rate-remember this is a percentage). 3. Skip a line. 4. Put in the cash inflows and outflows as before. 5. Reference the taxes. 6. Compute the cash flows and highlight. 7. Compute the PV of the cash flows. 8. Compute the NPV by summing the PV of the cash flows from above. 9. Compute the IRR of the cash flows (highlighted amount). 2. Compute the tax payment for each year of the project: 1. Put in year. Don't forget to start with time 0. 2. Tax rate (put in a negative - remember this is a percentage). 3. Skip a line. 4. Put in taxable inflow and out flows (need not be cash flows!). 5. Put in depreciation deduction. 6. Compute any capital gains. 7. Compute the taxable income related to the project. 8. Compute the tax related to the project and highlight. 3. Identify the stakeholders. 4. Come to a decision based upon the information above and qualitative factors of risk, impact on stakeholders, ethics and policy