Excel Worksheet -(with your name on it) AND written analysis, if done (on same worksheet) You may work together on this, but each student must submit their own Hw You are the CFO of the Palermo Track&Field Company. You have two investment proposals you are evaluating. You have the cash reserves and debt capacity to do one of them, but not both. Calculate the NPV and IRR of each opportunity. Your cost of capital (opportunity cost) is 10%. Assume all cashflows take place at the end of the year Investment A will assist you in entering an adjacent market with existing products, generating additional sales and margins. The cost of the investment is $1M made at time 0 and the identified cash flows from it are as follows: Year 1 Year 2 Year 3 Year 4 Year 5 100,000 200,000 225,000 250,000 250,000 Year 6 Year 7 Year 8 Year 9 Year 10 250,000 250,000 200,000 150,000 125,000 Due to an expected change in the track&field rules, sales are expected to decline starting in year 7 and there will be no additional cash flows after year 10 Investment B replaces a machine that is a bottleneck in your current production. A new machine will cost $750,000 at time 0 and is expected to yield the following cashflows over the next 8 years Year 1 Year 2 Year 3 Year 4 165,000 170,000 175,000 180,000 Year 5 Year 6 Year 7 Year 8 182,000 185,000 190,000 195,000 At the end of the 8th year, the machine will need to be scrapped and has no residual value. Basic HW (10 pts) The Basic HW requires you to calculate the NPV and IRR of the two investments Submit your excel worksheets. As always, you may collaborate on the HW (and the extra credit) with colleagues. Extra Credit (3 pts, applied to your cum quiz score) Using your analysis (above) write a short paragraph to your Board explaining which investment you would recommend and why. You can introduce other quantitative factors (such as size of investment or payback period) as well as qualitative factors as to the nature of the benefits and investment Your recommendation will be graded on its logic and the arguments made and supported. Grading on your recommendation will assume your NPV and IRR calculations are correct (even if they aren't)