EXPANSION AT EAST COAST YACHTS Because East Coast Yachts is producing at full capacity, Larissa has decided to have Dan examine the feasbi. ity of a new manufacturing plant. This expansion would represent a major capital outlay for the compary. A preliminary analysis of the project has been conducted at a cost of $1.2 mill of of $55 million and an addional outlay of $30 million in one the new plant will require an immedar. The company has received a special tax dispensation that will allow the building and equipment to be depreciated on a 20-year MACRS schedule. Because of the time necessary to build the new plant, no sales will be possible for the next yeat. Timo years from now, the company will have partial-year sales of $18 million. Sales in the following four years wil be $27 million, $35 million, $39 million, and $43 million. Because the new plant will be more efficient than East Coast Yachts's current manufacturing facilities, variable costs are expected to be 60 percent of sales and fixed costs will be $3.5 million per year. The new plant will also require net working capital amounting to 8 percent of sales for the next year. Dan realizes that sales from the new plant will continue into the indefinite future. Because of this, he belleves the cash flows after Year 5 will continue to grow at 3 percent indefinitely. The company's tax rate is 21 percent and the required return is 11 percent. Larissa would like Dan to analyze the financial viability of the new plant and calculate the profitability index, NPV, and IRR. Also, Larissa has instructed Dan to disregard the value of the land that the new plant will require. East Coast Yachts already owns it, and, as a practical matter, it will go unused indefinitely. She has asked Dan to discuss this issue in his report. vase Jtuuy I Chapter 8 Closing Case: Expansion at East Coast Yacht (p.260). Answer each question with a minimum of a paragraph and a maximum of three paragraphs in a word document. Include demonstration of Excel equation, analysis, or chart to supplement your analysis