Evans Ple is evaluating the following overseas project, which requires an initial investment of 3,000,000 with a residual value in year 4 of 500,000 The following forecasts have been provided, having taking into account exchange gains and losses in sterling Year 0 1 2 3 L'000 E000 t'000 L'000 '000 Machinery (3.000) Revenue 1,000 1.540 2,250 2,500 Direct materials (70) (90) (125) Direct labour (90) (112) (275) (300) Variable production overheads (20) (37) (48) Fixed production overheads (80) (80) (80) (BC) Depreciation (525) (625) 1625 Profit 117 616 1.232 1,303 The following information is relevant: Direct materials will have to increase by 3% for each relevant year. Direct labour will increase by 2x for each relevant year. Variable overheads will increase by 1.5% for each relevant year. The fured overheads are relevant to the new project and cannot be apportioned elsewhere. Depreciation is on a straight-line basis over the project's life. Inflation is assumed to be around 25% throughout the project's life. The revenue is expected to increase by 2.5% throughout the project's We, for each relevant year Corporation Tax is assumed to be 19% per annum, paid one y ears gnore capital allowances). Beguid 1) Calculate the Net Present Value (NPV) of the above project, using your calculated weighted average cost of capital (adjusted for inflation from part 1 (20 Marks) 2) Calculate the Accounting Rate of Return (ARM) of the above project. (10 Marks 3) Calculate the Discounted and Normal Payback in years and days of the above project. 15 Martes) 4) In no more than 400 words, critically discuss what financial and non-financial factors Evans Ple should debate before the project is undertaken. Evans Ple is evaluating the following overseas project, which requires an initial investment of 3,000,000 with a residual value in year 4 of 500,000 The following forecasts have been provided, having taking into account exchange gains and losses in sterling Year 0 1 2 3 L'000 E000 t'000 L'000 '000 Machinery (3.000) Revenue 1,000 1.540 2,250 2,500 Direct materials (70) (90) (125) Direct labour (90) (112) (275) (300) Variable production overheads (20) (37) (48) Fixed production overheads (80) (80) (80) (BC) Depreciation (525) (625) 1625 Profit 117 616 1.232 1,303 The following information is relevant: Direct materials will have to increase by 3% for each relevant year. Direct labour will increase by 2x for each relevant year. Variable overheads will increase by 1.5% for each relevant year. The fured overheads are relevant to the new project and cannot be apportioned elsewhere. Depreciation is on a straight-line basis over the project's life. Inflation is assumed to be around 25% throughout the project's life. The revenue is expected to increase by 2.5% throughout the project's We, for each relevant year Corporation Tax is assumed to be 19% per annum, paid one y ears gnore capital allowances). Beguid 1) Calculate the Net Present Value (NPV) of the above project, using your calculated weighted average cost of capital (adjusted for inflation from part 1 (20 Marks) 2) Calculate the Accounting Rate of Return (ARM) of the above project. (10 Marks 3) Calculate the Discounted and Normal Payback in years and days of the above project. 15 Martes) 4) In no more than 400 words, critically discuss what financial and non-financial factors Evans Ple should debate before the project is undertaken