Capital Budgeting Project: Clothing Business. Initial Cash Flow: $15,000. With a $15,000 loan from bank. The project will be financed with 50% debt and 50% equity. The cost of debt is 5% fixed for 5 years. The cost of equity will be 12% making the WACCC 7.5%.

• Able to sell the business model in 5 years for 20% of price.

Please do the following in excel:

1. Initial cash flows, operating cash flows, and terminal cash flow.
2. Compute Payback; IRR; NPV; NPV profile.
3. Conduct a Sensitivity/Scenario analysis.
4. Demonstrate an understanding of how the project will be financed. Understand that debt and interest expenses are generally not included in the analysis (see the text for an explanation why).
5. Your results should be presented graphically as well. A minimum of the NPV profile should be presented.