Future Tech, a small manufacturer of portable 3-D printers, has asked your team to evaluate a proposed capital budgeting project. Your team has been charged with analyzing the X-printer, a portable device for engineers and designers to use when out of the office. Market research data suggests that the firm can sell 5,000 units per year at a price of $___905____ each. Variable costs are expected to be $470____ per unit. Fixed costs for the project will run at $___380,000________ per year. The project is expected to have a 6 year life.

The firm will need to invest in $1,000,000 of equipment at the start of the project. The cost to install the equipment will be $$50,000. MACRS 7-year class life depreciation is to be used. In six years, the equipment is expected to have a market value of $400,000. Net working capital is expected to increase by $300,000 at the start of the project and stay at this level until the end, when it will be recovered. The cost of capital for Future Tech is 15% and the tax rate is 22%.

1. Set up a capital budgeting analysis in Excel. Given information must be shown in the upper left corner of your spreadsheet. Point to these cells as you build your analysis.
2. Calculate NPV in Excel. Should you accept this project based on the NPV method? Explain.
3. Calculate IRR in Excel. Should you accept this project, based on the IRR method? Explain.
4. Calculate PI in Excel. Should you accept this project, based on the PI method? Explain.
5. Use Goal Seek to find the breakeven sales volume for the project. In other words, at what sales volume would NPV = 0?
6. Available data suggests that the sales volume for this product may be as high as 10,000 or as low as 4000 in the coming years. Variable cost per unit may run as high as $650 or as low as $350 per unit. Prepare a scenario analysis for this project, including calculation of NPV and IRR for each scenario.