Johnny Bravo smiled with satisfaction as he perused the marketing report he had ordered on a new blockbuster product that had been developed by his firm CN Inc. The report indicated that there was a strong market demand for their instant pompadour setter, Set Wet Zatak (SWZ), which enabled customers to style their hair into a pompadour within seconds. Moreover, the marketing analysis helped him formulate a clear business plan to extract full value from this product. He felt that the 10 million spent on the marketing report was well worth it. Key assumptions of his business plan were as follows 1. Capital Expenditure i. The business would be launched immediately with the procurement of capital equipment worth 720 million. ii. The business would be closed down after 10 years at which point, the equipment would be sold for 86.4 million. iii. The capital equipment would be depreciated using the WDV method at a rate of 20% pa. The depreciation is fully tax deductible. 2. Working Capital Investment i. The business would require an initial working capital investment of 60 million. ii. No additional working capital investment would be required over the duration of the project. iii. This working capital investment would be fully recovered at the end of Year 10 , when the business is closed. 3. Sales i. He expects to sell 2 million units of the SWZ in Year 1. ii. Sales are expected to drop by 10% every year partly due to competition and partly due to fall in innovation quotient of the product. iii. Selling price per unit is expected to be constant at 300 over the 10 year period. 4. Costs i. Cost of production is expected to be 120 per unit in Year 1 and rise at 5% pa thereafter. ii. The project will also incur some fixed costs in relation to rentals, marketing, administration etc. which are expected to be equal to 48 million for each of the 10 years. 5. Taxes i. The firm faces a tax rate of 25%. ii. Both profits and capital gains are subject to the same tax rate. 6. Cost of capital for the project is 15%. Answer the following questions. Note that all values are to be entered in million. (i.e. if your answer is 100.23 million, enter 100.23 in the box) Also all present values (PVs) are to be calculated at the launch of the project (i.e., start of Year 1). Assume all cash flows for Year 1 to Year 10 occur at the end of the year. For parts a to k, all costs and PV of costs are to be entered as POSITIVE NUMBERS. Only NPV in part 1 is to be entered as negative, if negative. Do not round off intermediate calculations, round off final answer to 2 decimal places. Assume that sales of fractional units are possible. This will simplify your calculations as you need not round off number of units sold to a whole number. a. What is the expected revenues for the project in Year 10? million o. What is the expected COGS for the project in Year 10? million c. What is the expected fixed cost for the project in Year 10? million d. What is the expected depreciation for the project in Year 10? millionmillion e. What is the expected pre-tax capital gains on the sale of capital equipment in Year 10? million What is the PV (at present) of the expected proceeds (after-tax) from the sale of capital equipment in Year 10? million 9. What is the PV (at present) of the working capital investment expected to be recovered in Year 10? million What is the PV (at present) of the expected after-tax revenues over the 10 years? million What is the PV (at present) of the expected after-tax COGS over the 10 years? million j. What is the PV (at present) of the expected after-tax fixed costs over the 10 years? million k. What is the PV (at present) of the expected depreciation tax shields over the 10 years? million I. What is the total NPV (at present) of the project? million