I had already asked the question once, and someone only sent me the file attached below. nevertheless, i want to know how to calculate it and would be happy about a solution in excel. I don't understand this!!

Grant Thomas, the financial advisor to Innovative Manufacturing is evaluating the following new investment in a manufacturing project:-

The project has a useful life of 10 years.

Land costs $5m and is estimated to have a resale value of $7m at the completion of the project.

Buildings cost $4m, with allowable depreciation of 5% pa straight-line and a salvage value of $0.8m.

Equipment costs $3m, with allowable depreciation of 20% pa straight-line and a salvage value of $0.4m. An investment allowance of 20% of the equipment cost is available.

Revenues are expected to be $5m in year one and rise at 10% pa.

Cash expenses are estimated at $2m in year one and rise at 5% pa.

The new product will be charged $300,000 of allocated head office administration costs each year even though head office will not actually incur any extra costs to manage the project.

An amount of $200,000 has been spent on a feasibility study for the new project.

The project is to be partially financed with a loan of $6m to be repaid annually with equal instalments at a rate of 5% pa over 10 years.

Except for initial outlays, assume cash flows occur at the end of each year.

The tax rate is 30% and is payable in the year in which profit is earned.

The after tax required return for the project is 10% pa.

Required

(a)Calculate the NPV.Is the project acceptable? Why or why not?

(b)Conduct a sensitivity analysis showing how sensitive the project is to revenues, cash expenses and to the cost of capital. Explain your results.

\"Y'Ear Initial Llulla!` HEVETILIES* \L_.ZIEAT EHFIFTIEE=\ AllDESIGNEDZIE\\ LOSTITEFIS! ! L_.. 31=FT FITCITIES. LIEFIREFIGHTICITI` TEHSILILE ITIC HILOF FILIPIN $_ TO`_ 4 4 4.{`` FPT. [ZT. 45 1 . 32 2. 972. 55 LILILI LILILT. LILY `FIE . LIFILI. F.3\ 7 . TEE . CIENT. 7.3 | |[` 1. EILIS, 52'T. }} FIT. [ZT. 45| 2.32 2. 972. 55 1.5 2 2. 372. 5.5\ 4 5 .E . B. Z7 . 7T\ 1 . [FIE; LEIII . F. 3\ 1. 5:4 2 , 215. 5 2" FIT. [ZT. 45| {PET. GTZ. 5.5 1. GET. 972. 55\ 2. TTT. SEIJI. P.}| |[` 7. EZE [4B. FIT 2. 375. 25II.[I]* PTT. [IZ7. 45\ }. ZEZ. TZZ. 5.5\ 2. 4BZ. TZZ. 55\ 7:30. BITE . TT\\ {[13. 7:37 . 87\ 1 . TZ``ZEIT . EIT 2. 4:37. [173. 1 10 ITT. [27. 45| 3.8:12. 45. 9.5.5 3. [172. 459. 55 \2 . TUE . TZY . BIZ\\ Z.QUE. TZY . BIG| |[` 1. ELLIE * [BIT . 3Z* B. [SZ. JELLI| 2.55 2. SEN . [III ITT. [Z7. 45. | 4.42 2.958. 55 7 . ZEE GEIT. ST| } 1 . TEXT. 574 . 7.3 B. EST. ELIS. [IT] PTT. [ZT. 45\\ 5. TOIT. SES. 5.5 1. 4 TUTTS. EIF\ 3.4.3: 1 1. 401.4. 5:3\ } 3.5.3 1. 404. 6:3\ \[`] 7 . EEZ. 974. 30 7 . 74.3.SEE. [III* 2.574. ZZZ . [I] PTT. LIZ7 . 45\\ 5. 5.5 2. 35,5. 5.5 1. FIZZ. FLIE. IT\ 3. 95, 51. 5:4. 4. 5.4\\ 4 . 15 , 51 . 5:4 9. 5. 4\ \[` TO . PIT. 345. [1] 2.35 , 4. 512. ] PTT. DIZY. 45\ BIGGIE.[5. 5.5 E. 4EE . [[5 . 5 5 1 . 345 ELIT. EIT| 4.5 4[1. 20.3. 83| 4 . 740. 213 .04 | [` FIT. [Z7. 45 | {.ETC.DE,4. 5.5\ 6 . 571 . 15 , 4 . 5.5 \ Z.5{`.[ITE . 37 | {. LIZT .[} . 1.3| EZZT. J.30 . 1.3 | |[`] Total Initial Goetz F'riric : IFIEI! [IL TENITI FILE - EiLildiri] InItErez! 5` EITHIFITIEN* TriEt alITIEnte $ TTT. UZ'T. 45 Feasibility =``^! [LEFTECiation fizz LE EN Calculated for building On all LENI WE are " HERE S= [ME]WIFITIER. For Only FIVE WEST=\ HEELITITZ the land . building and EquiFITIent i= =old at the Salvage value at the End of the Project . the OFFICEFriate gain and Lazz iz calculated LIElow : Eight; value\ \{alu.``E "ELLE\ GainI'LLIZE Land EqqWIFITIERI! TOtell TZLIQUIDITY HEE LEEN aidEd in THE LEE! HE SITEITI LIEFORE ISH Profit