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Berkshire Inc. is planning to invest in a project which entails a cash outlay of $ 1 7 5 , 0 0 0 and expects

Berkshire Inc. is planning to invest in a project which entails a cash outlay of $175,000 and expects acash flow of $65,000/year for the next four years. The before tax cost of debt is 9% while the tax ratefor the company is 40%. The current share price for Berkshires stock is $32 per/share and theexpected dividend next year is $1.50 per share. Berkshires expected growth rate is 5% and theyfinance the project with 70% newly issued equity and 30% debt, while the flotation costs for equity are4.5%.Consider that Berkshire is considering another project worth $25 million which will be financed withdebt worth $10 million and $15 million in equity stock (equal to the company's current capitalstructure). The before-tax required return on debt is 10%(after tax) and 15% for equity. Themanagement requires expert opinion on the feasibility of the proposed projects for which they appointyou as a financial consultant to assist the management in taking some financial decisions. Perform a sensitivity analysis to know the impact of a 10% increase and 10% decrease in initial investment (excluding floatation cost) on NPV for the first project. Also find the Breakeven NPV using excel

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