J K L M N. 8 L D E F G H I 1 Chapter 8 Problem 14 2. a). 3 Facts and Assumptions 4 Initial cost $ 28,000,000 Each cell shaded is valued at 50 points each. 5 Unit sales 400,000 Each cell shaded is valued at 1.33 points each. 6. Selling price per unit, this year $ 7 Variable cost per unit, this year $ 8 Life expectancy (years) 9 Salvage value 10 Depreciation Straight line 11 Tax rate 37% 12 Nominal discount rate 10.0% 13 Real discount rate 10.0% 14 Inflation rate 0.0% 15 16 Year 17 Initial cost 18 Annual sales (units) 19 Price per unit 20 Variable cost per unit 21 Revenue 22 Variable cost 23 Depreciation 24 Income before tax 25 Tax 26 Income after tax 27 + Depreciation 28 Free Cash Flow 29 b). 30 IRR IMPORTANT: After calculating the IRR and NPV, enter the values in cells J30 and J31 31 NPV @ nominal rate because the values in cells B30 and B31 will change when you complete part C. 32 c). 33 In "Facts and assumptions" above, change the inflation rate to 8%. 34 RR IMPORTANT: The formula referred to in part (C) has been incorporated in the "Fact and Assumptions" 35 NPV @ nominal rate so you do not need to enter that formula anywhere in this file.