Capital Budgeting and Uses of Financial Reporting Voice-Soft Inc. is trying to determine whether to open a new product line, Voice-Write, a speech-to-text product, which is expected to be competitive for four years. The investment will be made in 2019. At that time, the cost of the new capital equipment including shipping and installation is $310,000. The equipment will last for 4 years. They use a straight line depreciation schedule and the salvage value is 40000. For 2020 to 2023, sales are expected to be $400000, 400000, 420000, and 420000; and operating expenses, $280000, $280000, $270000, $270000. The company is expecting to lose operating income of $20000 per year due to Voice-Write cannibalizing its current product, Voice-Speak. Regardless of your answer to Part 1 above (WACC calculation) assume Voice-Soft has a tax rate of 40% and a weighted average cost of capital (WACC) of 12%. 1. Complete the Project cash flow statement below and then answer questions 2-5 2019 2020 2021 2022 2023 Sales Operating Expenses Opportunity Costs Depreciation Operating Income (EBIT Taxes Operating Income after taxes Depreciation Cash Flow Salvage Value Salvage Tax Net Salvage Value Initial capital Investment Project Cash Flow 2. Determine the Net Present Value 3. Determine the IRR. 4. Should the investment be made? Why? 5. Voice Soft Inc. Considers another project, Mind-Write that has an NPV of S100,000 for a WACC-0 and an IRR = 15% The CEO wanted to compare the IRR of Voice-Write and that of Mind-Write and make an investment decision. You are not convinced that this is the best method. Explain why Finally, the CFO asked you to do a NPV sensitivity analysis based on WACC (as he is not sure that you computed it correctly.) Present the analysis in a table for WACC starting at 0% and ending at 15% using increments of NPV to be? Explain your answer 6. 3%. How sensitive do you find