Hillsong Inc, manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $240,438. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 $390,900 2 399,800 3 410,100 425,400 434,000 6 434,900 7 436,400 The new sewing machine would be depreciated according to the declining-balance method at a rate of 20%. The salvage value is expected to be $379,100. This new equipment would require maintenance costs of $ 94,000 at the end of the fifth year. The cost of capital is 9%. Click here to view PV table. Use the net present value method to determine the following: (If net present value is negative then enter with negative sign preceding the number eg.-45 or parentheses eg. (45). Round present value answer to decimal places, eg. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Calculate the net present value. You are working in a strategic management role at Best Bean, Inc., a chain of coffee shops. Your team is considering expanding in 2020 by building one or more new retail outlets in the Detroit area. Four locations (A, B, C, and D) are being considered. Locations A, B, and Care ten year Investments, with income projections shown in the "Location Data" tab. Location D is an eight year investment. Locations C and D are also very near each other in Allen Park, and so should be 2 considered mutually exclusive (that is, Best Bean might invest in one or the other, but not both). N 4 Your manager has asked you to prepare a report on how best to use the capital budget of $3.55 million. 15 This may include investing in one of the available locations, or it may not. If it is possible under the 16 $3,550,000 budget, you may recommend investing in more than one location. 12 18 In an Excel file: 19 Calculate the following for each location: Cash payback period Net present value Internal rate of return Profitability index Average rate of return 25 Use a discount rate of 16% (Best Bean's minimum rate of return) where necessary. Show all answers to 26 two decimal places (dollars and percentages). Note some helpful formulas in the "Excel TVM formulas" 27 tab. 29 in a Word document: 30 Prepare a memo summarizing your findings and recommendations. 32 Submit both documents through Canvas by 5:00 PM December 11. DE = HL 2021 2022 2027 2024 771.000 771,000 771.000 771,000 2023 771.000 551.200 219.800 771,000 551,200 229,800 771.000 551 200 BE 2026 771.000 551.200 219 DO 2028 271.000 551.200 219. DO 551 200 219.800 551200 249 ROO 219 800 219 800 1.674,000 200,000 147.400 2023 2026 2027 6 Proiected 17 Revenues 18 Expenses 2022 682,200 682,200 2020 682,200 490.900 191 300 2021 682,200 490,900 191.00 2024 682 200 490 300 191,300 2025 682,200 490,900 191.300 682,200 490.900 191.300 191 300 191,300 1,470,000 21 Locations 22 Initial investment 23 Residual value 24 Annual depreciation 147,000 Proiected Income 571.500 396,500 175,300 2024 $51.900 196,600 155,100 61.900 396,600 165,300 28 Expenses Net Income 2027 54 900 396,600 145,300 202 31.900 396,600 135,300 561.900 396,600 145 300 196,600 155,300 $31.900 396,600 135,300 175,300 165,300 Location 32 Initial investment 33 Residual value 34 Anal deprecat 192.000 300 000 211,500 36 Proxected cams 2020 .. Expense figures shown include depreciation with the exception of depreciation, il expenses are