FIN 325: Corporate Finance Assignment: Capital Budgeting Basics Problem 1 - NPV Profile Siesta Incorporated is looking at a project and has the appropriate cash flow. However, there is much disagreement on the appropriate discount rate to use with the project. Barracuda Count Dracula, the CFO, has requested that you provide the NPV at various interest rates between 0% and 40% at 2% intervals. That way when they are able to access the proper discount rate for this project they will know if the project is a go. In addition you are to graph your NPV results at each interest rate to show the NPV profile of the project. Confirm that the IRR intersects the horizontal axis at the SO NPV for the project. The cash flow for the project is listed below in millions of dollars: Year 0 1 2 3 5 6 7 8 CF -35.05 3.44 5.79 923 14.68 18.39 21.07 16.42 11.68 Show your results in a spreadsheet. Copy your graphs from MS-Excel to MS Word and write your recommendations in the MS-Word file. Mini-Cases RWE Enterprises: Expansion Project Analysis RWE Enterprises, Inc. (RWE) is a small manufacturing firm cost of 2 million, RWE's management estimates that the new located in the hills just outside of Nashville, Tennessee. The production line will add $700,000 per year in afer-tax cash flow firm is engaged in the manufacture and sale of feed supplements to the firm, such that the full 10-year cash flows for the line are used by cattle raisers. The product has a molasses base but is as follows: supplemented with minerals and vitamins that are generally thought to be essential to the health and growth of beef cattle. Year After-tax Cash Flow The final product is put in 125-pound or 200 pound tabs that are then made available for the cattle to lick as desired. The ma $13.000.000) 700.000 terial in the tub becomes very hard, which limits the animals consumption 700.000 700,000 The firm has been running a single production line for the 700,000 past five years and is considering the addition of a new line. The (1.100.000) addition would expand the firm's capacity by almost 120 per- 700.000 cent because the newer equipment roles a shorter downtime 700.000 between hatches. After each production run the boiler used to