i want you to practice using excel for this question. We will have computer based test later, so good to have some practice. Build a quarterly cashflow for each of the inflows and outflows below. When using NPV function in excel, all cell in the range need to contain an amount or 0, if not the computation is wrong.

An insurance company is considering setting up a branch in a country in which it has not previously operated. The company is aware that access to capital may become difficult in 15 years time so they will exit the project after 15 years. Its cost of capital is 9%

The following cashflows are generated in the development and operation of the branch.

Cash Outflows

1) Between the present time and the opening of the branch in three years time the insurance company will spend $1.5m per annum on research, development and the marketing of products. This outlay is assumed to be a constant continuous payment stream.

2) The rent on the branch building will be $0.3m per annum paid quarterly in advance for twelve years starting in three years time.

3)Staff costs are assumed to be $1m in the first year, $1.05m in the second year, rising by 5% per annum each year thereafter. Staff costs are assumed to be incurred at the beginning of each year starting in three years time and assumed to be incurred for 12 years.

Cash Inflows

1)The company expects the sale of products to produce an income with $4m for the first year after the branch opens and the amount rises by $0.25m per annum for the following years. This income is assumed to be received at the end of each year

The company expects to be able to sell the branch operation 15 years from the present time for $8m.

Find NPV of the project over the 15 year investment horizon, in million, with 3 decimal point.