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Hello, can anybody please help me? The company INOVA, a.s. is considering investing in the renewal of product production equipment that has been on the

Hello, can anybody please help me?

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The company INOVA, a.s. is considering investing in the renewal of product production equipment that has been on the market for a long time, and a large part of its sales is contracted in advance. The investment in the equipment is CZK 5,600,000 (using straight-line depreciation), we anticipate a necessary pre-investment increase in working capital by CZK 400,000 (dissolution at the end is not calculated and is perceived as sunk costs).The expected return respecting the corporate risk is 10% and the income tax rate is 20%. A.) Other data are in Table1. Evaluate the investment using NPV, IRR, PI, Discounted payback methods, Annuity. B.) By using Table 2 (where it shows the expected minimum and maximum values of risk parameters) and Monte Carlo simulation, calculate the mean, stand. deviation, min, max, risk of loss of NPVs(the probability to have a negative NPV) on 1000 trials. Based on your simulation, evaluate the range of positive of NPVs with a 95 % confidence index. C.) Use the two-factor sensitivity analysis to show how the NPV will be changed if your X-axis will represent the different discount factors ranging between IRR and the Y-axis will represent the following items: a) Q ranging between minimum and maximum values b) FC ranging between minimum and maximum values (Note: the equipment was bought from someone who has been using it for a year) Tab. 1 Tab 2. 1 2 3 4 min max Q 1,100 1,100 1,100 1,100 800,000 1,300,000 p 10 10 10 10 7 12 VC 5 5 5 5 4 6 depreciation ? ? ? ? FC 1,500,00 1,500,00 1,500,00 1,500,00 1,490,000 1,600,000 tax 20% 20% 20% 20% 20% IC 5,600,00 Change in WC |400,000 discount factor ? Calculate the dicsount factor based on the CAPM methodology, where you know that the company INOVA is operating in 2020 in the automotive indutry in the Czech republic

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