Apex Ltd is considering a short investment with a life of 2 years.

Increase in existing sales would amount to 10.000$, constant every year.

Resulting cost savings would amount to 1.000$, constant every year.

The new investment would use existing company premises, currently idle and without alternative use. But the new investment would increase current 10.000$ rent to 12.000$ per year as an extended space would be needed.

The sales require working capital. The company estimates a WC balance needed to support each year sales of 10% of each year sales.

The new venture would require an investment of 10.000 $ and it is expected that, at the very end of the life, the equipment will not be sold but just scrapped.

The investment will be depreciated at a rate of 1.000 $ per year (OK, even if life is 2 years, please amortise this way).

Tax rate is 20% and the appropriate discount rate is 10%.

What is the NPV of this investment? And IRR?

What is the scenario analysis of the views of the external advisor to the company: sales of 8.000 first year and 9.000 second year. Depreciation of 3.000 first year and 1.000 second year.

What if the asset is finally sold for 7.000, rather than scrapped? Structure the model so that you can simply write in "Sale Price" 7.000 or 0, and works in both cases.

Create two sensitivity tables of your choice.