As a consultant your friend comes to you with a business idea. You have to help him support this idea and evaluate it. The initial investment in equipment is 80000$. This equipment should be depreciated on a straight-line basis over the life of the project. No residual value is expected at the end of the period. The aim is to produce and sell the product for four years. Unit sales in the first year are 3500$. A 10% increase in sales per year is expected from the lifetime of the project. Unit price (sales price) is 39, change cost per unit is 20 and fixed cost is 37000$ per year. Immediately, along with the initial investment, money must be invested in net working capital (NWC). Income tax is 20% Yield is 15%.

1) Set up an annual income statement each year when embarking on this project. 2) Set up a net cash flow each year. 3) Find the net present value (NPV) and intrinsic growth (IRR) of the project, interpret and answer whether to embark on this project based on these calculations. 4) What could / should the sales of the number of units in the first year (now 3500$) at least be in order to make this investment based on NPV (In Excel)?