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here's the template, please use it and show the work Consider the following base case proposal for an investment in a plant in Georgia :

image text in transcribedhere's the template, please use it and show the work

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Consider the following base case proposal for an investment in a plant in Georgia : Capital investment Project life in years Depreciation method Unit sales p.a Total fixed costs p.a. $5,000,000 5 Straight-line 200,000 $300,000 Unit sales price Unit variable cost Tax rate Cost of funds $16 $5 30% 15% Required: Complete the base case, best case and worst case scenarios, assuming the unit sales price, and the variable and fixed cost estimates are only accurate to within +/ 20% of the base case estimates. Use the template that we used in class to complete this exercise. (See Solution to Chapter 11, Problem no. 6 for the template.) Chapter 11 Problem 6 Facts are the same as for problem 5a 35% Capital investment Useful life in years Tax depreciation estim. Residual value $924,000 8 straight line Tax rate Cost of capital 15% zero Worst Case +/- 10% Best Case +/- 10% Base Case Expected sales (units) Unit price Unit variable cost Annual fixed costs 67,500 41.40 34.10 907,500 75,000 46.00 31.00 825,000 82,500 50.60 27.90 742,500 Sales Total variable costs Total fixed costs Depreciation EBIT Income tax NIAT Add back depreciation Operating cash flow PVIFa @15% for 8 years PV of op cash flow Capital investment 2,794,500 2,301,750 907,500 115,500 -530.250 -185,588 -344,663 115,500 -229,163 4.48732 -1,028, 325 -924,000 3,450,000 2,325,000 825,000 115,500 184,500 64,575 119.925 115,500 235,425 4.48732 1,056, 427 -924,000 4,174,500 2,301,750 742,500 115,500 1,014,750 355,163 659,588 115,500 775,088 4.48732 3,478,066 -924,000 Net present value -1.952,325 132,427 2,554,066

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