Epsilon Products, Inc., (EPI) projects unit sales for a new device as follows: Year Unit Sales 1 87,500

2 105,000

3 119,000

4 108,000

5 92,000 ________________________________________

Production of the device will require $1,000,000 in net working capital to start and additional net working capital investments each year equal to 9 percent of the projected sales increase for the following year. Total fixed costs are $1,450,000 per year, variable production costs are $250 per unit, and the units are priced at $350 each. The equipment needed to begin production has an installed cost of $24,000,000. This equipment qualifies as seven-year MACRS property, and the accounting department supplies you with the following depreciation figures: Year MACRS Depreciation

1 3,429,600

2 5,877,600

3 4,197,600

4 2,997,600

5 2,143,200 ________________________________________

In five years, this equipment can be sold for about 15 percent of its acquisition cost, and will have a book value of $5,354,400. EPI is in the 35 percent marginal tax bracket and has a required return on all its projects of 16 percent. Determine the Payback Period, Internal Rate of Return and Net Present Value of this project.

Please answer with supporting excel formulas