Fill in all blanks of the excel template $($see excel requirements at the end of the question$)$ using the information and addressing the questions in the text below. Report the results of the NPV and IRR for the base case and alternative assumptions on first year sales, cost of capital, and revenue growth answering the questions below.

You have been hired by Internal Business Machines Corporation $($IBM$)$ in their capital budgeting division. Your first assignment is to determine the free cash flows and NPV of a proposed new type of tablet computer similar in size to an iPad but with the operating power of a high$-$end desktop system.

Development of the new system will initially require an initial capital expenditure of $$1,079,300.$ The project will then require an additional investment of $$539,650$ in the first year of the project $($year $1).$

The product is expected to have a life of five years. First$-$year revenues for the new product are expected to be $$2,387,700.$ The new product's revenues are expected to grow at $15\%$ for the second year then $10\%$ for the third and $5\%$ annually for the final two years of the expected life of the project.

EBITDA is expected to be $20\mathrm{.}8\%$ of revenues of each year. The tax rate is $21\mathrm{.}0\%.$

Your job is to determine the rest of the cash flows associated with this project. Your boss has indicated that the operating costs and net working capital requirements are similar to the rest of the company and that depreciation is straight$-$line for capital budgeting purposes.

Compute the Free Cash Flow for each year.

a$.$ Assume that the project's EBITDA will be $20\mathrm{.}8\%$ of revenue each year. Calculate EBITDA as EBIT $+$ Depreciation expense from the cash flow statement.

b$.$ Determine the annual depreciation by assuming IBM depreciates these assets by the straight$-$line method over a five$-$year life.

c$.$ Calculate the net working capital required each year by assuming that the level of NWC will be a constant percentage of the project's sales. Use IBM's NWC$/$Sales $(31\mathrm{.}3\%)$ for the last fiscal year to estimate the required percentage. $($Use only accounts receivable, accounts payable, and inventory to measure working capital. Sales from last fiscal year $=$ $$79,590,000,$ Accounts receivable from last fiscal year $=$ $$29,820,000,$ Accounts Payable from last fiscal year $=$ $$6,558,000,$ Inventory from last fiscal year$=$ $$1,682,000)$

d$.$ To determine the free cash flow, deduct the additional capital investment and the change in net working capital each year.

EBITDA$/$Sales $=20\mathrm{.}8\%$

NWC$/$Sales $=31\mathrm{.}3\%$

Tax Rate $=21\mathrm{.}0\%$

Cost of Capital $($WACC$)=12\mathrm{.}0\%$

Yoy Growth:

Year $2$: $15\%$ growth from Year $1$ Revenues

Year $3$: $10\%$ growth from Year $2$ Revenues

Year $4$: $5\%$ growth from Year $3$ Revenues

Year $5$: $5\%$ growth from Year $4$ Revenues

PART $1-$ Spreadsheet: Required Content filled out for Excel Speadsheet $($from Year $0$ to Year $6)$:

$-$ Revenue

$-$ YOY Growth

$-$ EBITDA

$-$ Depreciation

$-$ EBIT

$-$ Taxes

$-$ Net Income

$-$ Depreciation $($added back$)$

$-$ Increase in NWC

$-$ CapEx

$-$ Free Cash Flows

$-$ Discount Factor

$-$ Present Value

$-$ NPV

$-$ IRR

$-$ Depreciation Schedule

$-$ NWC $($not just increase in NWC$)$

PART $2-$ Question: If the cost of capital is $12\%,$ The NPV and IRR are closest to:

$[$A$]51,543$; $13\mathrm{.}2\%$

$[$B$]30,767$; $12\mathrm{.}5\%$

$[$C$]41,643$; $15\mathrm{.}2\%$

$[$D$]63,496$; $16\mathrm{.}8\%$

A completed spreadsheet for visual reference would be appreciated. And please don't forget to show the NWC each year and Change in NWC each year and explain how to calculate. Thank you.