FINC3131 Fall2019 individual project on capital budgeting SAP company is evaluating a project that produces a new model of high-end ceiling lights. The WACC IS 10% and the tax rate is 21%. 1. The marketing vice president believes that annual sales will be 15,000 units if each unit is priced at $2,000. However, 20 percent of the sale will be from the lost sales of older models. 2. The engineering department has determined that the necessary equipment would be purchased ar $9.5 million, and another $500,000 Rave to be paid for shipping and installation. The company uses 10-year straight-line depreciation method. The proiect will require a change in net working capital: the current inventory level will increase $2 million account receivable will increase by $0.5 millioo account payable increases by $0.5 million, and the minimum cash balance will increase by $1 million. 4. In the past year years, the company spent $200,000 in R&D in developing the new model. 5. The project will require hiring two new managers, who cost $300,000 per year. 6. The project's estimated economic life is 10 years. At the end of that time, the equipment is expected to have a market value of $1 million. 7. The production department has estimated that variable cost will be 50% of sales and fixed costs, excluding depreciation, will be $5 million per year. 8. Currently, the overhead of the firm is $600,000. And the accounting department will allocate 30% of it to the new project. Please find the NPV of the project. You need to show me the steps to find the initial investment, operation cash flows each year, non-operating cash flows in the last year, and how to find NPV. If you do not show the steps, you earn zero INC3131 Fall 2019 individual project on capital budgeting SAP company is evaluating a project that produces a new model of high-end ceiling lights. The WACC IS 10% and the tax rate is 21%. 1. The marketing vice president believes that annual sales will be 15,000 units if each unit is priced at $2,000. However, 20 percent of the sale will be from the lost sales of older models. The engineering department has determined that the necessary equipment would be purchased at $9.5 million, and another $500,000 have to be paid for shipping and installation. The company uses 10-year straight-line depreciation method. The project will require a change in net working capital: the current inventory level will increase by $2 million, account receivable will increase by $0.5 million, account payable increases by $0.5 million, and the minimum cash balance will increase by $1 million. 4. In the past year years, the company spent $200,000 in R&D in developing the new model. $. The project will require hiring two new managers, who cost $300,000 per year. 6. The project's estimated economic life is 10 years. At the end of that time, the equipment is expected to have a market value of $1 million. The production department has estimated that variable cost will be 50% of sales and fixed costs, excluding depreciation, will be $5 million per year. Currently, the overhead of the firm is $600,000. And the accounting department will allocate 30% of it to the new project. Please find the NPV of the project. You need to show me the steps to find the initial investment, operation cash flows each year, non-operating cash flows in the last year, and how to find NPV. If you do not show the steps, you earn zero