FastTrack$$ Bikes, Inc. is thinking of developing a new composite road bike. Development will take $6$ years and the cost is $$213,000$ per year. Once in$$ production, the bike is expected to make $$$$319,500$ per year for $10$ years. Assume the cost of capital is $11\%.$

a$.$ Calculate the NPV of this investment$$ opportunity, assuming all cash flows occur at the end of each year. Should the company make the$$ investment?

b$.$ By how much must the cost of capital estimate deviate to change the$$ decision? $($Hint$$: Use Excel to calculate the$$ IRR.$)$

c$.$ What is the NPV of the investment if the cost of capital is $13\%?$

Note$$: Assume that all cash flows occur at the end of the appropriate year and that the inflows do not start until year $7.$

a$.$ Calculate the NPV of this investment$$ opportunity, assuming all cash flows occur at the end of each year. Should the company make the$$ investment?

$1.$The present value of the costs is $$$ $\_\_\_.($Round to the nearest$$ dollar.$)$

$2.$The present value of the benefits is $$$$\_\_\_.($Round to the nearest$$ dollar.$)$

$3.$The NPV of the investment opportunity is $$$ $\_\_\_\_.($Round to the nearest$$ dollar.$)$

b$.$ By how much must the cost of capital estimate deviate to change the$$ decision? $($Hint$$: Use Excel to calculate the$$ IRR.$)$

$1.$The IRR of the investment opportunity is $\_\_\_\%.($Round to two decimal$$ places.$)$

$2.$To change the$$ decision, the deviation would need to be $\_\_\_\%.($Round to two decimal$$ places.$)$

c$.$ What is the NPV of the investment if the cost of capital is $13\%?$

$1.$If the cost of capital is $13\%,$ the present value of the costs is $$$ $\_\_\_\_.($Round to the nearest$$ dollar.$)$

$2..$If the cost of capital is $13\%,$ the present value of the benefits is $$$ $\_\_\_\_.($Round to the nearest$$ dollar.$)$

$3.$If the cost of capital is $13\%,$ the NPV of the investment is $$$ $\_\_\_.($Round to the nearest$$ dollar.$)$