Build an Excel model taking into consideration the following economic and financial premises, provided by the company and by economic consulting firms for the projection of free cash flow:

• Before analyzing this project, you paid 11 million USD to a Consulting Firm in order advise you on the convenience of undertaking the following investment project.
• The demand for your product is estimated at 10 units yearly (2024).
• The price of each product the first year of sales is 10 million USD and it has a 71% profit margin.
• Administrative and sales expenses are estimated at 21% of sales.
• A constant annual inflation of 9% is estimated in the US during the life of the project. COGS, administrative expenses, and price are adjusted yearly with inflation.
• The factory will be built at the end of 2023 on land that needs to be bought and valued at 8 million USD.
• Also, an investment in equipment of 70.9 million USD is estimated, the depreciation of which will be calculated on a straight-line basis with a salvage book value of 2.9 million USD at the end of the useful life (8 years).
• After ten years, it is expected that the demand for your product will be saturated and from then on it will be equal to zero and it is decided to liquidate the project's assets. At that time, it is expected to receive a cash flow before taxes from the sale of the equipment of 3 million USD. For the land, it is expected to receive a net cash flow after taxes of 1 million USD.
• The credit sales policy is 80 days, the payment policy to suppliers is 50 days and inventories are 1 month.
• The income tax rate in USA is 30%.
• The capital cost or required return of the project has been estimated at 7.77%.
• Use: 360 days, 12 months, 52 weeks, 30 days.

Perform sensitivity analyses on sales volume, price, direct labor, materials, and energy cost. What do you observe?

1. Scenario 1 (Sheet 1). Perform a capital budgeting analysis with the information provided in the case (base scenario).
2. Scenario 2 (Sheet 2). You have been advised by the consultants that you should be able to increase the volume by 9% starting on year 2.

For all possible scenarios, you know that you need to use the FCF method and determine the NPV, IRR, Simple and Discounted Capital Recovery Period (both expressed as in complete years, months, and days) and explain which one(s) will you choose if they were mutually exclusive projects.